Recognizing Contract Risk and Opportunities Memo
Recognizing Contract Risk and Opportunities Memo
LAW 531
September 14, 2010
University of Phoenix
Recognizing Contract Risk and Opportunities Memo
The current managers in companies exposed to legal problems as a result of trade relationships in companies where they operate. Trade relations between the companies are subject to a legal framework and managers must be knowledgeable in legal matters which would allow the reduction of legal problems when conducting business transactions with customers. Managers of private and public companies work to considering the conventional law of the country in which they operate. This law allows participants to create a valid contract agreements or commercial transactions. These commercial transactions could generate legal risks or opportunities existing between the parties in a business relationship. The experience and expertise of business managers today is determining the time of viewing any threats or opportunities arising from business relationships with customers. A manager of any company should identify potential risks or take advantage of the opportunities presented in business relationships with his customers and prospects for many reasons.
Business managers must measure the legal risk of their business with internal and external customers of the organization when entering into a contract, in order to avoid potential legal problems that may affect the business image of the organization. Risk Management is a structured approach to manage the uncertainty regarding a threat, through a sequence of human activities including risk assessment, developing strategies to manage it and mitigation of risk using managerial resources. The strategies include transferring the risk to another party, avoiding risk, reducing the negative effects of risk and accepting some or all of the consequences of a particular risk. Business managers should reduce various risks associated with existing legislation where their companies operate. These risks and especially when making contracts may refer to many types of threats caused by environment, technology, human beings and organizations. Similarly, enterprise risk management is a process conducted by the board of an organization, management and staff of the entity. It is applied in establishing enterprise-wide strategies designed to identify potential events that may affect the entity and manage risks to provide reasonable security and integrity regarding the achievement of objectives.
Any manager of a company is exposed to legal risks when his company makes commercial contracts, as there are demands of regulators, as well as implicit or explicit contracts that are concluded with customers,