Brand risk is essentially your risk, which is associated with negative public opinion and customer opinion, employee morale and financial problems, and is part of the consequences of financial, legal and security problems. Mitigating brand risk is more important than ever, as bad news can spread quickly in today`s hyper-connected digital world and quickly impact your brand`s reputation. This, in turn, can affect your financial performance and the cycle continues. Companies often enter into agreements with independent contractors or suppliers, but sometimes the risks inherent in such agreements are not well understood. Service providers such as carpenters and electricians often present organizations with important contractual terms in the form of cost estimates, work orders, and maintenance contracts. A comprehensive contract management ecosystem is needed to mitigate indirect risks, consisting of policies, practices, processes, people and technologies. Close interaction between legal and operational entities at the time of contract development is necessary to ensure that both parties get what they need from the contract, separately and jointly, so as to minimize the potential impact on the other party. Poor or perverse incentives, poor planning and demand management, misinformed purchasing, deliberate manipulation of contracts, misunderstandings – all this can undermine the value of a contract. Other areas of risk include: Although contracts may include an unlimited number of parties, the most common type of contract is between two parties, one acting as supplier, seller or owner and the other party acting as buyer, buyer or lessee. Whenever a member of the Harvard community enters into a binding contract, it could require the university to fulfill all the obligations prescribed in the agreement, no matter how costly or difficult they may be. Persons authorized to perform contracts on behalf of Harvard therefore have a duty to act in the best interests of the university without taking undue risks.
In keeping with Harvard`s role in a particular contractual situation and BEFORE entering into negotiations with other participants, it is important to consider the business objectives (opportunities) behind the contractual relationship, the business risks arising from entering into the relationship, and whether the proposed compensation is appropriate given the services to be provided/provided when weighed against the allocation of those risks. A very useful by-product of the review process is the ability to advise the legal team on any identified deficiencies in the contract, particularly those related to risk. A Buyer`s failure to obtain and implement advice from either group or otherwise comply with the contractual risk management standards and practices set forth herein exposes the University jointly and its individual academic or administrative unit to potentially significant financial losses. Although Harvard maintains its own insurance programs, there are certain types and parts of losses that Harvard cannot or does not insure against. For liabilities arising from a supplier agreement that have been strengthened by the admission of less stringent conditions than those recommended above, the responsible TUB will assume the increased financial consequences imposed on the university for the portion of a loss that could be reimbursed by the supplier if the applicable standards and practices had been followed the contracts can be complex, but the dynamics that govern their creation are simple: one side wants the biggest turnover, the other the smallest effort. Whatever you`re looking for, one lesson is crucial: the value of contracts isn`t realized until they`ve been signed. Store them in a drawer and you may not just lose the benefits you wanted to get. They could open up to a variety of new risks. Security risks can be associated with some of the most well-known and serious consequences for your business. This is because security breaches with your contracts often lead to additional financial, legal, and branding issues (see below). Managing your contracts carries security risks by storing contracts in unsecured locations so that anyone with access to the contract has the same access to sensitive contract data, confidential contract data remains unencrypted, and confidential information is communicated via email.
Any gaps in the contract management support ecosystem can be a source of risk. A selection of these gaps and their potential risks may include the following: Contracts in all their forms are integrated into virtually all parts of academic operations and provide an important and integral support mechanism to advance Harvard`s mission. They come in many styles, but most often they take the form of consulting contracts, licenses, letters of intent, real estate leases, equipment or capital leases, purchase agreements, partnership agreements, research grant applications, and related supply and/or subcontracting agreements. . . .