Managing and overseeing contract risk factors can be difficult, stressful, and time-consuming. Manual contract risk assessment can cost organizations money and time and lead to costly and potentially disastrous instances of contract mismanagement. Organizations do their best to diligently track contract risk factors, including potentially negligent clause language. However, contract risk management can prove overwhelming when dealing with multiple deadlines and stakeholders. But all is not lost; there is a solution: contract management software. Read on to learn how to use a contract management risk and opportunity assessment tool to decrease risk and increase your bottom line.
What Is Contract Management Risk?
Contract management risk variables can include:
- data entry errors.
- outdated or erroneous clause language.
- compliance violations.
- a lack of protection of sensitive data (PCI, PII, emails, monetary values, bank routing numbers, phone numbers, etc.).
- missed contract lifecycle tasks, contract obligations, key dates, and milestones.
- and more.
What Is a Contract Management Risk and Opportunity Assessment Tool?
A contract management risk and opportunity assessment tool is a solution rooted in contract intelligence with AI and machine learning. It can enable organizations to manage and address contract risk factors while securely streamlining and automating contract lifecycle management (CLM) processes.
Here are some of the ways that a contract management risk and opportunity assessment tool can improve contract risk management!
Data Mining & Data Identification Automation
The assessment of preexisting contract data and prospective contract data, such as contracts in the pre-signature stage, can prove challenging – especially when manually searching through documents for clauses and keywords. Thankfully, robust CLM software solutions support automated data mining to help organizations identify key data fields – including PCI, PII, emails, monetary values, bank routing numbers, and phone numbers – which can decrease the risk of data-entry errors and streamline legal operations.
Drag and drop contract generation, complete with natural language processing (NLP), allows document data fields to seamlessly populate corresponding fields within a contract record via data field mapping for streamlined risk contract management.
The configuration of clause detection rules can allow organizations to compare imported clauses against those in their pre-approved clause library. A powerfully configurable contract data mining interface can allow organizations to manage search algorithm preferences and the manner in which AI is utilized within a contract lifecycle management system. The data mining tool supports the configuration of rules to properly assess contracts, both preexisting and newly introduced, to identify risky wording and other potentially deleterious data.
Risk analysis rules can be configured to assess all data within an organization's CLM software system and render risk scores per contract. This automated contract risk analysis can help organizations identify contract risk factors before finalizing eSignatures - highlighting caution areas of older active contracts in their post-award lifecycle. Additionally, working with a contract lifecycle management software provider that boasts SOC 1 and SOC 2 compliance virtually ensures the digital security of confidential or sensitive contract data – including PCI and PII - further enhancing contract risk management.
Contract Workflows & Notifications Enhancement
Handling contracts in both the pre-award and post-award phases of contract management can be difficult - particularly when managing many internal and external contract stakeholders of ranging authority. For example, requesting a senior lawyer to review a contract clause that could easily be reviewed by a junior lawyer can lead to contract workflow inefficiencies and decrease accountability and organization. In the post-award contract stage, organizations can lose track of contract risk factors and contract obligations without the proper workflow system in place.
Furthermore, organizations may inadvertently involve lawyers in the contract review process who are not direct stakeholders, which can cause widespread frustration, increase risk, and waste time. These types of workflow bottlenecks can not only bring inefficiencies but also can drastically increase contract risk by excluding a necessary stakeholder from a contract task – such as editing clause language that mitigates risk and saves organizations money.
Organizations can avoid many of the risk-incurring situations mentioned above with intelligent contract workflows and alerts. Valuable contract stakeholders, including general counsel and legal assistants, can be assigned to important tasks and receive alerts for completion. After a task is completed, a subsequent contract stakeholder can be notified via the configured workflow to complete the next task. Organizations can also assign specific contract clauses to specific contract stakeholders with clause ownership functionality, who can be notified when a specific clause is modified or changed.
Post-award obligation fulfillment and contract compliance can be assigned to necessary contract stakeholders to foster timely follow-through. As a contract renewal approaches, internal and external stakeholders can be notified in a timely manner with automated alerts. Furthermore, employee users can maximize on-screen alerts and recommendations in real-time with pre-configured notifications for improved contract visibility. Internal stakeholders can also utilize AI-based contract management software to help identify contract renewal opportunities for increased ROI.
Intelligent Contract Risk Assessment
Assessing contract risk factors within a vast array of contracts can be difficult without prioritization and visualization of risk variables. Whether organizations are dealing with ten contracts or ten million contracts, identifying and organizing risk factors can be hard when rummaging through words and other data within pages of documents. Without a graphical contract management risk and opportunity assessment tool, identifying and mitigating risk can prove arduous and almost impossible.
Thankfully, leading contract lifecycle management software supports risk assessment and OFAC search mapping to graphically visualize risk for future-minded risk contract management. Rather than manually digging through contract records for risk variables, organizations can utilize a visualized graph system that can plot contracts based on an identified risk score – yielding user-friendly risk analysis of active contracts that can help organizations in prioritizing important contract risk factors for better decision-making. Furthermore, organizations can easily analyze how a contract will perform with hypothetical risk variables and risk exposure within a visually engaging risk assessment matrix.
Organizations can maximize this contract risk assessment matrix and statistical data analysis to pinpoint negative, neutral, or positive facts about contracts within their CLM software system to help improve contract strategy. Organizations can also use message alerts, as mentioned before, to notify employee users if a contract incurs a value of X% greater than the average contract within their contract lifecycle management software database.
Organizations can also utilize the OFAC search graphical risk utility to identify if vendors, employees, and customers comply with the Office of Foreign Asset Control’s national sanctions lists.
This graphical risk visualization utility allows organizations to identify contract OFAC compliance for pre-award and post-award contract management stages – enhancing risk mitigation. Similarly, organizations can preconfigure rules to notify employee users in real-time if a current contract meets or exceeds a determined OFAC Search percentage to allow for swift risk mitigation before the efforts of the risk take effect.
Cobblestone Software - Your Premier Contract Risk Management Solution
Advanced contract risk assessment, risk mitigation, and opportunity assessment begin and end with CobbleStone Contract Insight®.
CobbleStone Software’s widely-trusted, award-winning, seamlessly integrated contract management software solution is the premier contract management risk and opportunity assessment tool. The integrated contract management software suite streamlines processes with increased governance, decreased friction, and maximum flexibility from contract requests to renewals. CobbleStone® has been a visionary leader in CLM software for over 20 years - and continues to innovate with evolving CLM process needs. CobbleStone’s user-friendly, robust, and scalable solution seamlessly integrates with mission-critical applications for unified and seamless contract management. Forrester names CobbleStone a Leader in CLM software - and it's easy to see why!
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!
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!