Appendix
Sidebar
Sidebar
Table of Contents
TOC placeholder
Governing Policy
Questions?
Please use the contact section in the governing policy.
When assessing the business risk of a contract, consider the following factors:
| Risk Category | Key Questions | Examples of High Risk |
|---|---|---|
| Financial | What is the total value? Are payment terms favorable? Is there potential for the inability to recover payments if the vendor doesn’t perform? | Large upfront payments, penalties for early termination, increased pricing at the discretion of the vendor without caps |
| Operational | Can we meet the obligations in the contract? Are timelines realistic? Are the responsibilities of the parties of the contract clearly defined? | Delivery of goods contingent upon the University’s storage or appropriate space, University’s performance of services that are dependent upon a third-party supplier that we cannot control |
| Compliance | Are there requirements that violate university policies, or other external legal requirements? | Delivery of protected information (e.g. student records or health information) |
| Reputational | Could this harm the University’s brand or reputation? | Partnerships with controversial entities, use of University trademarks that appear to endorse third party services |
| Exit Strategy | Can we terminate if needed? Will the agreement continue to renew automatically due to a failure to routinely review it? | Restrictive termination rights, automatically renewing contracts. |
In addition, consider the following:
- 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
- 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
- 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 judgment exercised in making important decisions, based on the severity of each of those factors, does the benefit of entering the contract outweigh the risk? Is there a way to mitigate the risk posed through operational measures or revising contract terms?
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.)