Contract Risk Assessment Definition
A contract risk assessment is a review of a company’s contracts to identify and assesses the risks associated with those contracts. The purpose of a contract risk assessment is to provide a company with information to help them make informed decisions about their contractual arrangements.
When conducting a contract risk assessment, companies should consider the following factors:
1. The type of contract: There are different types of contracts, each with its own set of risks. For example, fixed-price contracts are typically higher risk than time-and-materials contracts because there is less flexibility to adjust prices if costs increase.
2. The terms of the contract: The terms of a contract can have a significant impact on the risks associated with that contract. For example, long-term contracts are typically higher risk than short-term contracts because there is more time for things to go wrong.
3. The parties involved: The parties involved in a contract can also affect the risks associated with that contract. For example, if one party is much larger or more powerful than the other, that party may be able to impose unfair terms on the other party which could create significant risks for the weaker party.
4. The subject matter of the contract: The subject matter of a contract can also affect its risks. For example, contracts involving complex products or services are typically higher risk than simpler contracts because there is more room for things to go wrong.
5. The jurisdiction: The jurisdiction in which
