Guide – Using Contracts to Allocate Risk

By
John Kafrouni
25 Sep 2011
5
min read

It is almost certain that the eventuation of a risk will lead to lost time and money and possibly the failure of a project or a particular transaction. While taking “risks” in business is an essential part of doing business, and is what allows us the opportunity to prosper, parties can and should eliminate or reduce risks wherever possible.

To do this, organisations must act “preventively” – by proactively putting in place measures that will prevent a problem from occurring rather than reacting to the problem when it occurs. This occurs through managing risk firstly on a “project” level and then on a “transaction” or “contract” level. Such risk management is often referred to as risk allocation.

This Guide seeks to provide an outline to effectively manage or allocate risk by an organisation when considering a project and negotiating the project’s necessary commercial transactions or contracts with contractors and other suppliers.

Contracts-Allocating-Risk

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