If your unit does not have an established process for assessing risk, you may use the following factors when analyzing risk in the business terms of a contract.
(A) What is the likelihood of the risk occurring?
- Theoretically possible, but highly unlikely
- No more than once in the life of the product or service
- At least once in the life of the product or service
- Almost certain
(B) Assuming that the risk has occurred, what is the likelihood of damage from the risk?
- Almost impossible
- Remotely possible, but unlikely
- Some conditions favorable to damage occurring
- Possible, but not assured
- Almost certain
(C) Assuming that the risk has caused damage, what is the most likely worst-case damage?
- Minor, short-term irritation
- Noticeable effort to work around or correct
- Significant disruption to the work of the affected University unit
- Long-term disruption to the University unit affected, with consequential harm to other units
- Impairment of the mission of the University unit affected, with consequential harm to the mission, funds, or reputation of the University.
Using the sort of care and judgement exercised in making important decisions, based on the severity of each of those factors, does the value of the contract outweigh the risk?
Note that the University’s Office of Risk Management considers contracts especially sensitive if, under the contract, the University unit will provide products, parts, plans, consulting or specifications for medical devices, aviation/space industry, automotive/transportation industry, critical life support.
If you are uncertain about the severity of a given factor, consult with the Subject Matter Expert, if any, for the contract topic in question. (See Appendix, Required Review by Subject Matter Experts.)