How can you regularly review and update contracts to mitigate business risks?

If your contractor is worth their money , then an annual contract review is carried out by themselves to point out any changes or additions or challenges, this can be reviewed by the client and cross referenced against the work reports for the year , then a realistic picture can be painted. Imo. I don't hold with the buzz words , and kpi's etc personally after 30 years in my industry I find people love the sla kpi etc , great if you live your life at a desk looking at excel, but then what are you actually achieving? , in engineering it is difficult to kpi..

Each contract on the start must be thoroughly analysed and simplistic quantifiable and qualifiable SLA's developed and deployed and the user teams must be explained the process of filling up the evaluation matrix.

The negotiation and review process is often time-consuming, but it is crucial for ensuring that the final contract meets the needs and objectives of all parties involved. Planning and deep Collaboration among the stakeholders helps to facilitate the communication to reach mutually acceptable terms.

Build in regular exit clauses to allow both parties to modify; YES it should be ajustable by both sides otherwise it may become unstable and the SLAs will slide down!!

If you have resources like Sales force and Power BI. You can also develop multiple data trends that will identify trigger points for your contract development.

Contract reviews, particularly those involving commercial contracts, should be conducted with the clear objective of achieving commercial and corporate objectives while managing/mitigating legal risks. Lawyers should closely work and collaborate with the other internal stakeholders to achieve the said objectives. They should act as "business partners" and not as "business blockers".

Review of contracts from legal, regulatory and business perspectives may help to mitigate business risks, by addressing any gaps in existing contracts. Changes in circumstances may lead to different expectations or requirements at different times. The process of contract review may include discussions among internal stakeholders and/or external parties, with the objectives of reaching further consensus on necessary changes, and further recording mutually agreed changes in writing, for example, supplemental agreement or addendum. Contract review may be beneficial for mitigating business risks, as well as considering potential opportunities to deal with evolving business needs or changing requirements.

Periodic review of contracts may be very convinient both from legal and commercial perspective. From the legal side, it should be based on any legal framework change that could require the contract subsequent adaptation as well as on any no covered risk which should be covered due to New circumstances. From commercial side, New targets or changes in financial, strategic or economic interests for our company may turn a contract review even essential so a legal restatement of the contract can significantly contribute to turn the contract into a determinant mean for achieving such interests, so being really helpful for all the company's stakeholders. Therefore, it is important to provide clauses allowing the periodic review of the contract.

In my experience, an effective way to conduct a contract review, among a good planning of activities and ensuring a clear and effective communication between all the involved parties, is the creation of a check list of every aspect of the contract that must be reviewed. By doing it you can ensure that there are no legal nor business gaps.

Changing contracts post award is less than ideal. Change future contracts but not extant ones, unless the risks of holding the status quo are huge.

Regardless of the format you use in documenting updates, what is important is that the document is clearly worded and the changes easily understood. Among others, these can be attained by accurate reference to the contract sought to be amended and straightforward statements on what are the changes, how they affect the rest of the contract, and the effective date of the changes.

Of course any agreed amendment of the terms and conditions of a contract shall be reflected into an addenddum or even a new contract with the amended terms, basically depending on the amendment importance or the strategy regarding the parties relationship.

Regular contract reviews also helps in identifying any real time gaps you need to mitigate before you move forward with the relationship. Contract reviews help your benchmarking practices as well, it helps you compare apples to apples and oranges to oranges. Furthermore regular contract reviews gives you a ton of experience in understanding your particular category and the challenges that you may face with them!

It is important to ensure that your contracts are flexible and there is room for review as it helps mitigates risks , and responsive to changing environment.

Keep it simple. User teams need simplistic SLA compliance matrix to give out data points to analyse the variance from the KPI's. As an example at times the management perspective on an SLA varies from the user's compliance view.

Do not go at it alone!.. ..unless it is a short-term, low-risk, low-value contract OR you are a savant ?? Contract reviews are usually performed on high-value and/or high-risk engagements. More often than not, such agreements are in long formats - covering multiple areas of concern. Always try to enrol specialists (e.g. Legal, Risk-Compliance, Commercials/Business, etc.) into your team to help with your review exercises. Failure to do so might result in outcomes that places you in a worse position than where you started - or God forbid, cause you to burnout. P/S - Ignore my starting sentence. You shouldn't be performing reviews on low-risk, low-value contract anyways ??

Regularly reviewing and updating contracts is crucial to mitigate business risks. Consider performance monitoring, market conditions, force majeure clauses, insurance coverage, dispute resolution mechanisms, record keeping, business continuity planning, and employee training to enhance contract management practices and reduce risks. Stay proactive in addressing changes and challenges to maintain strong contractual relationships.

Planning, clear communication between the involved parties, collaboration and a good tool to support the contract managers during the review process. …last but not least good coffe helps too??.

In order to mitigate business risk I recommend below excercices to people in charge of Contracts: - Reveiw and update difinitions of each Contracts. - Have an smal directory of general provisions of boiler plates and use most appropriated of them in your draft. - Have intervals in your work, to reviw arbitraion, its procedure and settlments domicales. - Check daily exchange rates of hard currencies with you local currency and its trend. - Check and reveiw reference rates for adjusment of prices like LME, Libour and SOFR and .... - Ask my advises to avoide risk and attain benefits. Faithfully yours Mostafa Arablou +98 (0)938 422 63 22