Any contract – no matter how favourable the terms may seem – can bring risk as well as opportunity. To secure your enterprise, your team and your reputation, it’s important that your contract management activities include both data analysis and risk prevention.
The implication of contract risk
Contractual agreements contain critical information that can have positive and negative effects on the organisation. Without procedures in place to identify and monitor this kind of risk, companies can be unfavourably exposed, which may lead to higher costs, compliance violations, and, in the worse case scenario, a court case.
The good news is that you can prevent these situations by developing a strategy to assess any risk associated with your contracts. Early identification and prevention will enable you and your team to identify and address concerns early on rather, than react to negative exposure.
Avoid the unnecessary costs associated with contract risk
It’s important to review every detail in every contract. But this can be extremely time-consuming for the contract administrator and other stakeholders, and any additional support costs are often overlooked.
Enterprises should have a process in place for assessing and preventing contract risk, whenever possible. This is where intelligent software – supported by AI and machine learning – can proactively identify any risk in recent agreements, and alert your stakeholders to any possible exposure without incurring disproportionate costs.
Using AI to proactively identify risk
Intelligent contract management software can help you identify and act on contract-associated risk. Leading solutions now offer advanced capabilities which give system users improved contract oversight, proactive risk identification and continuous risk prevention.
Integrated AI and machine learning tools can assess contract language when adding new contracts to your contract management system, while periodically screening old contracts for sensitive data. By using a continuous analysis tool, you can identify potential risk in the early stages of a contract while also monitoring agreements after the fact.
Contract Insight, Four’s contract management software, includes a cutting-edge proprietary tool, VISDOM, which puts AI and machine learning (ML) to work to help your contract professionals eliminate hours of dreaded contract review and analysis.
It helps you identify potential risk by analysing document text, allowing the system to identify both good and bad language in a contract based on rules-based sentiment and risk-level ratings.
It will alert you to any sensitive data in your system such as:
• personally identifiable information
• employee data
• bank details
• credit card numbers
• credit card numbers
• national insurance numbers etc.
With our software you can configure risk analysis rules and run an analysis any time you want to identify trends and carry out a close-to-real time data analysis. This is the perfect tool to help you create a risk assessment strategy which will help you feel confident that you’re doing everything possible to stay compliant, avoid unnecessary costs and be alerted to future risk.
Our guide to creating a risk assessment strategy
1. Invest in smart contract management software
2. Identify the keywords, phrases, and clauses your enterprise might deem a risk to alert your users of any sensitive data.
3. Use any smart tools available within your software to analyse your contract data and assess risk.
If you follow these simple steps, you can easily identify contract risk and avoid the costs associated with mitigation that risk.
Contract Insight from Four Business Solutions
Four Business Solutions offer Contract Insight to help you better manage and de-risk your business. If you’d like a free trial to understand how Contract Insight can boost your security, and to find out more about VISDOM AI, please call me, John O’Brien on 0800 6250 025.
John O’Brien is the CEO at Four Business Solutions, global business consultants and software integrators providing business processes improvements in Finance, Supply Chain & Operations, across a broad range of industries.