Commercial Risk represents the financial, operational, and liability exposures of a client agreement that could lead to loss of profitability. In consulting SOWs, risks are often hidden in fixed-price models, extended payment terms (like Net-90), or uncapped SLA penalties.
Audit proposals to ensure liability caps, intellectual property protections, and client dependency clauses shift risk back to the client if they cause delivery delays.
Commercial Risk Review Checklist
- Boundary Limits: Are deliverables ranged or point-estimated? Are exclusions clear?
- Client Dependencies: Are delay costs shifted to the client if they violate dependencies?
- Liability Caps: Is total liability capped at or below the SOW value?
- IP Protection: Are our proprietary tools and code libraries explicitly excluded from the transfer?
How do you balance commercial risk with sales volume?+
By implementing clear risk tiers. Low-risk deals can be signed by sales leads; high-risk deals (fixed-price above a threshold, complex integrations) must go through Deal Desk reviews.
What is the most common commercial risk mistake?+
Accepting client-friendly terms (like broad indemnity or Net-90 terms) to speed up deal signing, without pricing the risk into the rate blend.