2. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
Identification of strategies
C-RM 1)
business and risk management
The word STRATEGIC functions as
a link to the beginning
of the presentation
Risk identification 2)
The abbreviation functions as
a link to
the general theory of
Contractual Risk Management
The numbers also function as
navigation links
to the beginning of the section
and as memory notes
to the content of the section
(point them by your mouse) 3)
Risk evaluation 4)
Contractual risk mitigation
Monitoring and control of contractual risk management 5) 6)
Development of strategies and procedures
business and risk management

3. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies 1) 2) 3) 4) 5) 6)

4. Identification of business and risk management strategies
Strategic
Identification of business and risk management strategies
C-RM 1)
What is the company’s operational environment like? 2)
What are company’s business strategies? 3)
What about risk management strategies? 4)
If such strategies do not exist, how should they be formed? 5)
What goals do these strategies set for the contractual risk management? 6)

5. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies 1) 2)
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of risks and risk distribution created by legal norms 3) 4) 5) 6)

6. Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1) 2) a)
General risks connected to the business: b) c)
1) Financial risks
(currency risk and risk of buyer’s insolvency, etc.)
2) Political risks
(risk of change in legislation, etc.)
3) Risk of interruption
4) Risk of dependency
5) Product risk 3) 4) 5) 6)

7. TBT Risk identification: Finance C Sales C Transport C Insurance C
Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1)
Risks connected to the coordination of the different parts of
a transnational business transaction: 2) a) b) c)
Finance C
Sales C 3) 4)
TBT 5)
Transport C
Insurance C 6)

8. Risk identification: Finance C Sales C Transport C Insurance C
Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1)
Risks connected to the coordination of the different parts of
a transnational business transaction: 2) a) b)
Payment modalities c)
Finance C
Sales C 3) 4)
INCO TERMS,
The 1982 Institute
Cargo Clauses
INCOTERMS,
COMBITERMS 5)
Transport C
Insurance C 6)

9. Risk identification: Sales C
Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1)
Risks connected to the coordination of the central parts
of a sales transaction: 2) a)
Spesifications for the goods b)
Delivery terms c) 3) 4)
Sales C 5)
Mechanism for the adaption of the contract
Payment terms 6)

10. Risk identification: Sales C
Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1)
Risks connected to a single business transaction: 2) a)
Negotiation risk
Risk of contractual disputes b) c)
Information risk 3)
Risk of product liability
Risk of non-performance 4)
Sales C
Risk of changing circumstances
Risk of delayed performance 5)
Risk of damage to or loss of the goods
Risk of non-conforming performance 6)

11. I S C Risk identification: Sales C
Identification of general risks connected to the business and business transaction
Risk identification:
Strategic
C-RM 1)
Need for contractual allocation of risks? 2) a)
Negotiation risk
Risk of contractual disputes b) c)
Information risk
I S C 3)
Risk of product liability
§ 1
§ 2
§ 3
§ 4
§ 5
§ 6
Risk of non-performance 4)
Sales C
Risk of changing circumstances
Risk of delayed performance 5)
Risk of damage to or loss of the goods
Risk of non-conforming performance 6)

12. Identification of legal norms regulating the transaction: traditional approach
Risk identification:
Strategic
C-RM 1)
BUILDING BLOCKS OF TRANSNATIONAL SALES CONTRACTS, 2)
MATERIAL FOR INTREPETATION
and MATERIAL FOR GAP-FILLING: a) b)
Interpretation
guidelines of the
contract standards
Tailored
contract terms
ORDRE
PUBLIC c)
International
trade usage 3)
Standard
contract clauses
Established usages
and/or practices
between the parties 4)
Standard
contract
terms ?
Law of the contract 5)
Contracting
standards
CISG
PECL, UPICC &
CENTRAL TLDB
LEX
MERCATORIA 6)

13. Risk identification:
Identification of legal norms regulating the transaction: RM-approach
Strategic
C-RM 1) 2) a)
TYPES OF LEGAL NORMS
REGULATING THE CONTRACT b) c)
MANDATORY
LEGAL NORMS 3)
INDIVIDUAL
CONTRACTUAL NORMS 4)
STANDARD CONTRACTUAL NORMS
DEFAULT
LEGAL NORMS 5) 6)

14. Risk identification:
Identification of legal norms regulating the transaction: RM-approach
Strategic
C-RM 1) 2) a)
TYPES OF LEGAL NORMS
REGULATING THE CONTRACT b) c)
MANDATORY
LEGAL NORMS 3)
INDIVIDUAL
CONTRACTUAL NORMS 4)
Designated
default legal norms
DEFAULT
LEGAL
NORMS
STANDARD CONTRACTUAL NORMS
(contractual
default legal norms)
Optional
default legal norms
(legal orders) 5) 6)

15. Risk identification:
Identification of legal norms regulating the transaction: RM-approach
Strategic
C-RM 1)
MANDATORY LEGAL NORMS,
DEFAULT LEGAL NORMS,
STANDARD CONTRACTUAL NORMS 2)
and INDIVIDUAL CONTRACTUAL NORMS: a) b)
Interpretation
guidelines of the
contract standards
Tailored
contract terms
ORDRE
PUBLIC c)
International
trade usage 3)
Standard
contract clauses
Established usages
and/or practices
between the parties 4)
Standard
contract
terms ?
Law of the contract 5)
CISG
Contracting
standards
PECL, UPICC &
CENTRAL TLDB
LEX
MERCATORIA 6)

16. Identification of risks and risk distribution created by legal norms
Risk identification:
Strategic
C-RM 1) 2) a)
What is the default legal distribution of the risks to the business and business transaction?
Are contract-specific investments adequately protected?
Do legal norms give adequate protection against the opportunistic behaviour of the contracting party?
Do legal norms create risks of their own? b) c) 3) 4) 5) 6)

17. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of the risks and risk distribution created by legal norms 1) 2) a) b) c) 3)
Risk evaluation 4) 5) 6)

18. Strategic
Risk evaluation
C-RM 1)
The goal is to allocate risk management resources with help of
determination of the risk exposure 2)
Risk exposure is determined as a multiple of
the likelihood of the risk and its extent: 3) 4)
Extent of the risk
Insignificant Great Catastrofical Li k e l y h.
Unlikely
Likely
Very
likely 1 2 3 2 4 6 5) 3 6 9 6)

19. 1 III II 2 3 I III 2 4 II 6 I II 3 6 I 9 I Risk evaluation C-RM 1) 2)
Strategic
Risk evaluation
C-RM 1) 2)
Determination of the likelihood and extent of risks connected to contracts is often difficult and a three-way classification might be sufficient: 3) 4)
Extent of the risk
Insignificant Great Catastrofical Li k e l i h.
Unlikely
Likely
Very
likely 1
III II 2 3 I
III 2 4 II 6 I 5) II 3 6 I 9 I 6)

20. The resources would then be allocated according to and in relation to
Strategic
Risk evaluation
C-RM
Allocation of resources of the company’s legal department based on a similar classification could be highly cost-efficient 1) 2)
The resources would then be allocated according to and in relation to
the risk exposure:
I Preventive law
II Preventive law & remedial law
III Remedial law 3) 4)
Extent of the risk
Insignificant Great Catastrofical Li k e l i h.
Unlikely
Likely
Very
likely
III 1 II 2 I 3 2
III II 4 I 6 5) II 3 6 I I 9 6)

21. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of the risks and risk distribution created by legal norms
Risk evaluation 1) 2) a) b) c) 3)
Contractual risk mitigation
a) Identification and evaluation of contractual risk management tools
b) Prediction and development of the viability of the contractual risk management tools
c) Contractual risk allocation 4) 5) 6)

22. Contractual risk mitigation:
Golden advices:
Strategic
C-RM 1) 2)
- predict eventual contractual problems and agree on meaningful governance mechanisms for the contract and the contractual relationship
- remember cost effectiveness considering negotiating, designing, monitoring and enforcement of contracts
- protect contract-specific investments
- remember to build exits
- prepare for contractual disputes 3) 4) a) b) c) 5) 6)

23. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
- Alternative governance mechanisms for business transactions? 3) 4) a) b) c) 5) 6)

24. STRATEGIES TRANSNATIONAL BUSINESS FOR
Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
STRATEGIES
TRANSNATIONAL BUSINESS
FOR 3)
Firm A 4) a) b) c) 5) 6)

25. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
Direct export sales
DIRECT
SALES 3)
Firm A 4) a) b) c) 5) 6)

26. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
Direct export sales
DIRECT
SALES 3)
Firm A 4)
Reseller a) b)
INDIRECT
SALES c) 5)
Sales Agent 6)

27. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
Direct export sales
DIRECT
SALES 3)
Firm A 4)
Reseller a) b)
INDIRECT
SALES c)
LICENSING 5)
Franchise
Sales Agent
License agreement 6)

28. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
ESTABLIHMENT
ABROAD
DIRECT
SALES 3)
Firm A
Joint Venture 4)
Reseller a) b)
INDIRECT
SALES c)
LICENSING 5)
Franchise
Sales Agent
License agreement 6)

29. GOVERNANCE MECHANISMS BUSINESS TRANSACTIONS FOR
Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
GOVERNANCE MECHANISMS
BUSINESS TRANSACTIONS
FOR 3)
Firm A
Joint Venture 4)
Reseller a) b) c) 5)
Franchise
Sales Agent
License agreement 6)

30. MARKET GOVERNANCE Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
MARKET
GOVERNANCE 3)
Firm A
Joint Venture 4)
Reseller a) b) c) 5)
Franchise
Sales Agent
License agreement 6)

31. MARKET GOVERNANCE SYMBIOSIS GOVERNANCE Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
MARKET
GOVERNANCE 3)
Firm A
Joint Venture 4)
Reseller a) b)
SYMBIOSIS
GOVERNANCE c) 5)
Franchise
Sales Agent
License agreement 6)

32. POWER GOVERNANCE MARKET GOVERNANCE SYMBIOSIS GOVERNANCE
Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
POWER
GOVERNANCE
MARKET
GOVERNANCE 3)
Firm A
Joint Venture 4)
Reseller a) b)
SYMBIOSIS
GOVERNANCE c) 5)
Franchise
Sales Agent
License agreement 6)

33. POWER GOVERNANCE MARKET GOVERNANCE SYMBIOSIS GOVERNANCE
Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales
POWER
GOVERNANCE
MARKET
GOVERNANCE 3)
Firm A
Joint Venture 4)
Reseller a) b)
SYMBIOSIS
GOVERNANCE c) 5)
Franchise
Sales Agent
License agreement 6)

34. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
- Alternative governance mechanisms for business transactions?
- Alternative contractual instruments? 3) 4) a) b) c) 5) 6)

35. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools
More detailed?
Yes!
No! 1)
Sales office 2)
Subsidiary
Direct export sales 3)
Firm A
Joint Venture 4)
Reseller a) b) c) 5)
Franchise
Sales Agent
License agreement 6)

36. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1)
Sales office 2)
Subsidiary
Direct export sales 3)
Firm A
Joint Venture 4)
Reseller a) b) c) 5)
Franchise
Sales Agent
License agreement 6)

37. Contractual risk mitigation:
Strategic
C-RM
Identification and evaluation of contractual risk management tools 1) 2)
- Alternative governance mechanisms for business transactions?
- Alternative contractual instruments?
- Alternative model contracts?
- Alternative standard clauses?
- Tailored contract clauses? 3) 4) a) b) c) 5) 6)

38. Contractual risk mitigation:
Strategic
C-RM
Prediction and development of the viability of the contractual RM-tools 1) 2)
- Personal/organizational experience of the viability of the alternatives?
- Case law examples of non-viable alternatives?
- Law, economics & organization-analyses of the alternatives?
- Examples of success stories? 3) 4) a) b) c) 5) 6)

39. Contractual risk mitigation:
Strategic
C-RM
Contractual risk allocation 1)
Golden rules of risk allocation: 2)
- don’t take larger risks than what you can not bear
- don’t take large risks to gain little
- don’t think that others do so 3) 4) a) b)
Golden rules of contractual risk manangement: c)
- don’t take risks that fall under the influence of your contracting/subcontracting party
- don’t take large risks just to please your contracting party
- don’t think others do so 5) 6)

40. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of the risks and risk distribution created by legal norms
Risk evaluation
Contractual risk mitigation
a) Identification and evaluation of contractual risk management tools
b) Prediction and development of the viability of the contractual risk management tools
c) Contractual risk allocation 1) 2) a) b) c) 3) 4) a) b) c) 5)
Monitoring and control of contractual risk management
a) Monitoring of changes in legal norms and their distribution of risks
b) Monitoring and control of the viability of the contractual risk management 6)

41. Monitoring and control of contractual risk managment:
Strategic
C-RM
Monitoring of changes in the legal norms and their distribution of risks 1)
What’s new in transnational commercial law? 2)
CISG-database at PACE 3) 4)
Transnational Commercial Law-database at CENTRAL 5)
Lex mercatoria a) b) 6)

42. Monitoring and control of contractual risk managment:
Strategic
C-RM
Monitoring of changes in the legal norms and their distribution of risks 1)
Are there any new contractual risk management tools available? 2)
National Contract Management Association (NCMA) 3) 4)
National Center for Preventive Law (NCPL) 5) a) b) 6)

43. Monitoring and control of contractual risk managment:
Strategic
C-RM
Monitoring and control of the viability of the contractual risk management 1) 2)
Did the contract function in an unexpected way?
Why did the contract fail? 3) 4)
Has the company’s riskposition changed? 5)
What must be done differently when planning the next transaction? a) b) 6)

44. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of the risks and risk distribution created by legal norms
Risk evaluation
Contractual risk mitigation
a) Identification and evaluation of contractual risk management tools
b) Prediction and development of the viability of the contractual risk management tools
c) Contractual risk allocation
Monitoring and control of contractual risk management
a) Monitoring of changes in legal norms and their distribution of risks
b) Monitoring and control of the viability of the contractual risk management 1) 2) a) b) c) 3) 4) a) b) c) 5) a) b)
Development of business and risk management strategies and procedures 6)

45. Development of business and risk management strategies C-RM
Strategic
Development of business and risk management strategies
C-RM 1)
Can contractual risk management support
company’s business according to its strategies? 2)
According to risk management strategies? 3) 4)
If not, should these strategies be reviewed? 5)
What has the contractual risk management
to offer for the development of these strategies? 6)

46. CONTRACTUAL RISK MANAGEMENT:
Strategic
STRATEGIC
CONTRACTUAL RISK MANAGEMENT:
C-RM
Identification of business and risk management strategies
Risk identification
a) Identification of general risks connected to the business and business transaction
b) Identification of legal norms regulating the transaction
c) Identification of the risks and risk distribution created by legal norms
Risk evaluation
Contractual risk mitigation
a) Identification and evaluation of contractual risk management tools
b) Prediction and development of the viability of the contractual risk management tools
c) Contractual risk allocation
Monitoring and control of contractual risk management
a) Monitoring of changes in legal norms and their distribution of risks
b) Monitoring and control of the viability of the contractual risk management
Development of business and risk management strategies and procedures 1) 2) a) b) c) 3) 4) a) b) c) 5) a) b) 6)

47. Go to Strategic C-RM Operative The end THEORY OF CONTRACTUAL C RM
RISK MANAGEMENT:
Identification of strategies 1)
Go to
Strategic
C-RM
Operative
Risk identification 2)
Risk evaluation 3) 4)
Contractual risk mitigation
Monitoring and control of contractual risk management 5)
The end 6)
Development of strategies and procedures

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