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What are the biggest misconceptions about risk management careers in Contract Management?

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If you are interested in pursuing a career in contract management, you might have some questions about the role of risk management in this field. Risk management is a vital skill for contract managers, who need to identify, assess, and mitigate potential threats and opportunities that may affect the performance and outcomes of contracts. However, there are also some common misconceptions about risk management careers in contract management that may deter or confuse some aspiring professionals. In this article, we will debunk some of these myths and clarify what risk management really entails in contract management.

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Dani?l Wehnes ??????

1 Myth 1: Risk management is only about avoiding losses

One of the biggest misconceptions about risk management is that it is only focused on preventing or minimizing losses, such as financial, legal, or reputational damages. While this is certainly an important aspect of risk management, it is not the only one. Risk management also involves identifying and exploiting opportunities, such as innovation, collaboration, or market expansion, that can enhance the value and benefits of contracts. Risk management is not just about avoiding the negative, but also about embracing the positive.

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Dani?l Wehnes ??????
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Risk management is about controlled risk, this sometimes means saying no and sometimes saying yes - Risk management, just like Finance and Legal/Compliance teams are the ones that will say "no" to protect the company and avoid loss. When sales or management has an opportunity to grow the business, the easiest mistake is to say "yes" without understanding the risk (from each department that will need to clean up the mess if it goes wrong, I am talking about operations, finance, legal, etc.) - make sure your company has a clear risk and acceptance profile aligned for clarity. Keep adjusting to today's economy and always make sure you're the one giving advice about what could go wrong in the worst-case scenario - the rest is up to management

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2 Myth 2: Risk management is a one-time activity

Another common misconception about risk management is that it is a one-time activity that is done at the beginning or the end of a contract. This is not true. Risk management is a continuous and dynamic process that requires constant monitoring, evaluation, and adjustment throughout the contract lifecycle. Risks are not static, but change over time due to internal and external factors, such as market conditions, stakeholder expectations, or performance issues. Risk management is not a one-off task, but a recurring practice.

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Dani?l Wehnes ??????
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Risk is a constant factor - industries, countries, economies, and clients, all change and influence the business of the company having the presence there. Be prepared for change - start by looking at a country level, and then start zooming in on the business, the region, the customer, and their customers. This will allow you to make a change quickly in the risk policy or overall risk appetite of a company if you need to, without cutting off all the business. Talk to sales - they are the first line of defense and can give the best feedback if an industry is changing or if fewer leads come in from a specific country - this is already a sign that things are changing (if you have a healthy business).

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3 Myth 3: Risk management is a technical or mathematical skill

A third misconception about risk management is that it is a technical or mathematical skill that requires complex calculations, models, or tools. While these can be useful and helpful, they are not the essence of risk management. Risk management is primarily a human and relational skill that requires communication, collaboration, and judgment. Risk management is not about crunching numbers, but about understanding and influencing people.

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Dani?l Wehnes ??????
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Risk management is mainly using common sense and looking at the data - comparing data and cross-referencing it with internal and external sources. If something looks too good to be true, it's either manipulated or it's a golden egg. In either situation build your case around a customer, a country, an industry, or even a product - make sure that you provide feedback that's constructive and clear for all parties involved (sales, legal, operations, management) and try to keep it light. Most people will not understand the in-depth details and or the end conclusion so try to explain it to them as if it's the 1st day at school and you're learning something new. Risk management is about data, cooperation, and learning - it's not rocket science.

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4 Myth 4: Risk management is a solo or isolated function

A fourth misconception about risk management is that it is a solo or isolated function that is performed by a single person or department. This is not true. Risk management is a shared and integrated function that involves multiple parties, such as contract managers, project managers, business owners, suppliers, customers, and regulators. Risk management is not a siloed activity, but a cross-functional and collaborative one.

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5 Myth 5: Risk management is a boring or stressful job

A fifth misconception about risk management is that it is a boring or stressful job that involves dealing with problems, uncertainties, and conflicts. While this can be challenging and demanding, it can also be rewarding and stimulating. Risk management is a creative and strategic job that involves finding solutions, creating value, and managing change. Risk management is not a dull or nerve-wracking job, but an exciting and fulfilling one.

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6 Myth 6: Risk management is a niche or limited career

A sixth misconception about risk management is that it is a niche or limited career that offers few options or opportunities. This is not true. Risk management is a versatile and diverse career that offers many paths and possibilities. Risk management is applicable and relevant to any industry, sector, or organization that deals with contracts, such as government, healthcare, education, technology, or manufacturing. Risk management is not a narrow or restricted career, but a broad and flexible one.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the biggest misconceptions about risk management careers in Contract Management?

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1 Myth 1: Risk management is only about avoiding losses

2 Myth 2: Risk management is a one-time activity

3 Myth 3: Risk management is a technical or mathematical skill

4 Myth 4: Risk management is a solo or isolated function

5 Myth 5: Risk management is a boring or stressful job

6 Myth 6: Risk management is a niche or limited career

7 Here’s what else to consider

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