Contract Risk Management


Contracts represent a vital support in Organizations around the world, being used to deliver the everyday supplies, whether for basic services or to supply the most strategic business of a company. That’s why it’s so important everyone involved in the negotiation and execution of the contracts understands the risks well and applies control strategies so that they are mitigated. Proper risk management is a decisive step in controlling the cost of the total risk.

Gatewit Risk Assessment Teams for Contracts are specialists who help companies find a methodical and continuous approach to contract risk management. The guidelines will be established for the analysis to quantify the risk of the undertaking and whether a contract must be reviewed. Low revenue, avoidable costs, loss of negotiating power is the result of the non-application of a methodology for contract risk assessment.

Point-out the nature of the risks factors by category
Team will examine the nature of each risk by category based on business objectives behind the contractual relationship. Intentions, obligations and profit expectations must be reflected to ensure a proper drafting of the contract.
Contract risk matrix
The risk is expressed in the form of a probability estimate and a utility loss estimate. An aggregate risk can be computed over all the possible scenarios
Scenario modelling
Risk factors present themselves as risk aggregators, facilitating the understanding of potential sources of risk and the logical organization of the various risks identified. They help the risk management process itself, since they allow the recognition of the areas of greater criticality, which should be subject to greater focus and detail. The risk can be derived being the non-performance of an obligation and usually does have a temporal sequence. With scenario modelling, these orderings come out.
In this phase, preventive and compensating risk measures are considered. Scope well defined, limitations of liability, contracts reviews, down payments, insurances, sanctions, indemnities, are examples of risk measures. In a decision process, multiple alternatives are generated and compared before the best one is chosen.