Reviewing contract risk can be time-consuming, challenging, and stressful. Manually assessing risk factors can cost an organization extra time and money while increasing the risk of inadvertent human oversights. While you can do your best to carefully track risk factors, including negligent clause language, it can prove challenging when dealing with multiple stakeholders and pressing deadlines. Read on to learn how three contract risk management tools proffered by contract management software can help protect your organization from the risks of poor contract management and, in some cases, your job.
Managing and mitigating contract risk can be challenging without the proper tools at your disposal. Fortunately - leading contract and risk management tools, rooted in industry-leading contract intelligence with AI and machine learning, can enable you to securely streamline and automate your contract lifecycle management (CLM) processes.
Tool #1 - Automated Data Mining & Identification
Assessing preexisting contract data and prospective contract data, including contracts in the pre-signature stage, can prove difficult – especially when manually sifting documents for keywords or clauses. Fortunately, leading CLM software offers an automated data mining tool to help you identify key data fields – including bank routing numbers, counterparties, phone numbers, emails, monetary values, PCI, and PII – which can reduce the risk of typographical data-entry errors and expedite legal operations.
Drag and drop contract creation, with the help of natural language processing (NLP), allows these identified data fields within uploaded documents to automatically populate the necessary fields within your contract record via integrated field mapping for a streamlined contract risk management process.
By preconfiguring clause detection rules, you can compare newly imported clauses against your pre-approved clause library. A highly configurable contract data mining tool can allow you to view search algorithm preferences and how AI is leveraged within a contract lifecycle management platform. The data mining tool can enable you to configure rules to properly assess contracts, both preexisting and newly uploaded, to identify risky wording and other data.
Preconfigured risk analysis rules can assess all data within your CLM software based on your configured frequency and render risk scores per contract. This automated analysis can help you identify risk variables before finalizing eSignatures and highlight caution areas of older yet active contracts in their post-award lifecycle that are newly uploaded to your CLM software. Moreover, working with a CLM software provider that is SOC 1 and SOC 2 compliant essentially ensures the digital security of confidential information – including PCI and PII - furthering contract risk management.
Tool #2 - Configured Contract Workflows & Notifications
Dealing with contracts in both the pre-award and post-award stages can be challenging, especially when dealing with many internal and external stakeholders of ranging authority. For instance, requesting a senior lawyer to review a clause that could have been reviewed by a junior lawyer can cause workflow inefficiencies and decrease morale. In the post-award contract stage, you can lose track of contract risk factors and obligation milestones without the proper notifications.
Moreover - when needing to renew a contract, you may inadvertently involve lawyers who are not direct stakeholders, which can cause frustration and waste time. These workflow bottlenecks can not only breed inefficiencies but also exponentially increase contract administration risks by inadvertently excluding a stakeholder from a necessary contract task – such as repositioning clause language that mitigates risk and saves your organization money.
You can avoid many of the abovementioned risk-incurring situations with the help of configured contract workflows and notifications. Stakeholders, including legal assistants and general counsel, may be assigned to specific tasks and receive notifications for completion. Once a task is completed, the necessary stakeholder may be notified within the pre-configured workflow to complete the subsequent task. You may also assign clauses to necessary stakeholders, who can be notified whenever a specific clause is modified.
Post-award contract compliance and obligation notifications can be assigned to necessary stakeholders to encourage timely anticipation and follow-through with counterparties to encourage post-award contract risk compliance. Upon a contract's upcoming renewal date, internal and external stakeholders can be automatically notified in a timely manner. Additionally, you can receive on-screen alerts and recommendations in real-time via pre-configured notifications for increased contract visibility. Internal stakeholders can also leverage AI-based contract management software tools to help identify areas of opportunity to leverage upon a contract’s renewal for further risk mitigation and increased ROI.
Tool #3 - Dynamic Contract Risk Assessment Mapping
Assessing contract management risk within a myriad of contracts can be challenging without visualization and prioritization. Whether you are dealing with ten or ten million contracts, identifying and prioritizing risk factors can prove challenging when sifting through words and other data variables within pages of documents. Without a centralized and graphical opportunity assessment tool, identifying risk can prove to be an arduous task.
Luckily, leading CLM software offers risk assessment and OFAC search mapping tools to graphically visualize risk within your documents for comprehensive risk contract management. Rather than manually sifting through your contract records for risk variables, you can leverage a visualized graph that can plot contracts based on their identified risk score – yielding a holistically visualized risk analysis of active contracts that can help you effectively prioritize contract risk factor decision-making. Moreover, you can analyze how a contract would perform with hypothetical risk variables and exposure within a risk assessment matrix - further helping you and your internal stakeholders prepare for prospective happenings.
You can leverage this visual contract risk assessment matrix and statistical data analysis to identify negative, neutral, or positive facts about contracts within your CLM system to help improve your contract strategy. You can also enable message alerts, as mentioned prior, to notify you if a contract incurs a value of X% greater than the average contract within your CLM software database.
You can also leverage the OFAC search graphical risk tool to identify if your contracts, including involved vendors and employees, comply with the Office of Foreign Asset Control’s national sanctions list.
This graphical risk visualization allows you to identify a contract’s OFAC compliance both in the pre-award and post-award stage – increasing comprehensive risk mitigation. Similarly, as abovementioned, you can preconfigure rules to notify you in real-time if a current contract meets or exceeds a specific OFAC Search percentage to allow for swift risk mitigation before it becomes untenable.
Manage Contract Risk With CobbleStone Contract Insight®
Advanced contract risk management begins and ends with CobbleStone Contract Insight, a CLM software Leader according to Forrester, that can equip you with the necessary tools you need to drive contract management success.
CobbleStone’s trusted, award-winning, fully integrated contract management software streamlines the contract management process with optimal governance, reduced friction, and high flexibility from contract requests to renewals. CobbleStone Software has been a visionary leader in CLM software since the mid-1990s. CobbleStone’s user-friendly, robust, and scalable solution seamlessly integrates with mission-critical applications for unified and seamless contract management.
Discover why thousands of contract managers trust CobbleStone Software with their contract management needs. To learn more about CobbleStone’s unparalleled contract management software, book a free demo with a Contract Insight expert today!
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Are you interested in future-minded contract management software tools? In our blog - 6 Critical Contract Management Tools for 2021 – learn how to leverage industry-leading CLM software tools for streamlined, user-friendly, and low-friction contract lifecycle management success!