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IMPLEMENTING CONTRACT RISK MANAGEMENT: NEITHER EXPENSIVE NOR COMPLICATED

Contract risk management does not have to be overly expensive or complicated. Today's businesses possess a wide range of contract-related and risk management-oriented skills and capabilities. Many business, project, and legal professionals already apply contract risk management steps successfully as part of their job. the challenge is educating new people to do the same and transforming the skills and knowledge of experienced individuals to organization-level competence.

the transfer of data, information and knowledge becomes particularly visible when people leave the organization and their contract-related responsibilities need to be reallocated. The more these individuals keep in their files, to-do lists, email inbox, personal task manager, or memory, the more difficult it will be for others to take over. Will all contracts still be fulfilled or monitored? And where are those contracts? Access to them must be secured to those who need to know, regardless of changes in personnel. Yet continuity does not happen by itself—it needs to be planned.

Contract risk management solutions vary depending on the size of the organization, the value and nature of its deals and relationships, and situation-specific issues. Some approaches are universal. Contract risk management can in many cases be built in into the activities, systems and processes that businesses already have in place—for example, within the framework of business excellence or quality management initiatives, enterprise risk management, corporate governance, contract management, or project management. It can be linked to existing procedures, such as bid and contract reviews, audits, and self-assessment activities. With some updating and refining, these processes can be adjusted to secure ongoing and systematic recognition of and response to contract risks and opportunities.

 
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