Contract Risk Scorer
Overview
Not all contracts need the same level of review. A $5K SaaS subscription with standard terms is not the same as a $500K services agreement with a startup handling customer data. This skill provides a scoring methodology to assess contract risk and allocate review effort appropriately.
Why Score Risk
WITHOUT RISK SCORING:
─────────────────────
All contracts reviewed same way
High-risk contracts under-reviewed (buried in queue)
Low-risk contracts over-reviewed (wasted effort)
No visibility into risk exposure
WITH RISK SCORING:
──────────────────
High-risk contracts prioritized
Low-risk contracts fast-tracked
Review depth matches risk level
Portfolio-level risk visibility
Risk Dimensions
The Seven Dimensions
┌─────────────────────────────────────────────────────────────────┐
│ CONTRACT RISK DIMENSIONS │
├─────────────────────────────────────────────────────────────────┤
│ │
│ 1. VALUE 2. COUNTERPARTY 3. DATA EXPOSURE │
│ Financial Who is this? What data access? │
│ exposure Stability? Sensitivity? │
│ │
│ 4. TERM 5. CONTRACT TYPE 6. JURISDICTION │
│ Duration Standard or Where? │
│ Lock-in unusual? What law? │
│ │
│ 7. NEGOTIABILITY │
│ Their paper or │
│ ours? │
│ │
└─────────────────────────────────────────────────────────────────┘
Scoring Methodology
Dimension 1: Contract Value
| Value Range |
Score |
Rationale |
| <$25,000 |
1 |
Limited financial exposure |
| $25,000 - $100,000 |
2 |
Moderate exposure |
| $100,000 - $500,000 |
3 |
Significant exposure |
| $500,000 - $1,000,000 |
4 |
Major exposure |
| >$1,000,000 |
5 |
Critical exposure |
CUSTOMIZATION REQUIRED:
┌─────────────────────────────────────────────┐
│ Your value ranges: │
│ │
│ Score 1: Under $________ │
│ Score 2: $________ to $________ │
│ Score 3: $________ to $________ │
│ Score 4: $________ to $________ │
│ Score 5: Above $________ │
└─────────────────────────────────────────────┘
Dimension 2: Counterparty Risk
| Counterparty Type |
Score |
Rationale |
| Fortune 500 / Established public company |
1 |
High stability, reputation risk |
| Mid-market established company |
2 |
Stable, reasonable risk |
| Growth-stage company (funded, >3 years) |
3 |
Some stability uncertainty |
| Early-stage startup (<3 years, funded) |
4 |
Higher failure risk |
| Unknown / Individual / Unfunded |
5 |
Uncertain stability |
Additional Counterparty Factors:
| Factor |
Score Adjustment |
| Prior relationship (positive history) |
-1 |
| Prior relationship (issues) |
+1 |
| Publicly traded |
-1 |
| Private equity backed |
0 |
| VC backed (Series B+) |
0 |
| Seed/Angel stage |
+1 |
| Foreign entity |
+1 |
| Government entity |
0 (but special handling) |
CUSTOMIZATION REQUIRED:
┌─────────────────────────────────────────────┐
│ Your counterparty classifications: │
│ │
│ Approved vendors (score 1): [list/location] │
│ Preferred vendors (score 2): [list/location]│
│ Standard vendors (score 3): default │
│ Watch list (score 4): [list/location] │
│ Blocked vendors (score 5): [list/location] │
└─────────────────────────────────────────────┘
Dimension 3: Data Exposure
| Data Type |
Score |
Examples |
| No data access |
1 |
Physical goods, no system access |
| Internal business data only |
2 |
Financial systems, internal docs |
| Employee data |
3 |
HR systems, payroll |
| Customer data (non-sensitive) |
4 |
CRM, usage analytics |
| Sensitive data (PII, PHI, financial) |
5 |
Healthcare, payments, SSN |
Data Exposure Checklist:
DATA ACCESS ASSESSMENT:
□ No system access required
□ Read-only access to internal systems
□ Write access to internal systems
□ Access to employee data
□ Access to customer data
□ Access to customer PII
□ Access to payment/financial data
□ Access to healthcare data (PHI)
□ Cross-border data transfer required
Highest checked = Data score
Dimension 4: Contract Term
| Term Length |
Score |
Rationale |
| Month-to-month |
1 |
Easy exit |
| <1 year |
2 |
Short commitment |
| 1-2 years |
3 |
Standard commitment |
| 2-3 years |
4 |
Extended commitment |
| >3 years |
5 |
Long-term lock-in |
Term Adjustments:
| Factor |
Score Adjustment |
| Termination for convenience |
-1 |
| No termination for convenience |
+1 |
| Auto-renewal (standard notice) |
0 |
| Auto-renewal (>90 day notice required) |
+1 |
| Termination penalties |
+1 |
Dimension 5: Contract Type
| Contract Type |
Score |
Rationale |
| NDA (standard) |
1 |
Low complexity, standard terms |
| Simple purchase order |
1 |
Transactional |
| SaaS subscription (standard) |
2 |
Standard terms available |
| Professional services |
3 |
Deliverable/performance risk |
| MSA (new relationship) |
3 |
Foundational agreement |
| Licensing agreement |
4 |
IP complexity |
| Partnership/Reseller |
4 |
Ongoing relationship complexity |
| Joint venture / Investment |
5 |
High complexity, long-term |
| M&A related |
5 |
Highest complexity |
Dimension 6: Jurisdiction
| Jurisdiction |
Score |
Rationale |
| Your home state |
1 |
Known law, convenient forum |
| Favorable US state (DE, NY) |
2 |
Predictable, business-friendly |
| Other US state |
2 |
Generally manageable |
| Canada, UK, Western Europe |
3 |
Similar legal systems |
| Other developed markets |
4 |
Different legal systems |
| Emerging markets / High-risk jurisdictions |
5 |
Enforcement uncertainty |
CUSTOMIZATION REQUIRED:
┌─────────────────────────────────────────────┐
│ Your jurisdiction preferences: │
│ │
│ Home state (score 1): _______________ │
│ Preferred states (score 2): _________ │
│ Standard international (score 3): ____ │
│ Requires approval (score 4+): ________ │
└─────────────────────────────────────────────┘
Dimension 7: Negotiability
| Negotiability |
Score |
Rationale |
| Our approved template |
1 |
Known terms, low risk |
| Our template with minor mods |
2 |
Mostly known terms |
| Negotiated (balanced) |
3 |
Both parties' input |
| Their paper (standard vendor) |
3 |
Need to review |
| Their paper (non-negotiable) |
4 |
Limited recourse |
| Their paper (aggressive) |
5 |
One-sided terms likely |
Risk Calculation
RISK SCORE = Σ (Dimension Score × Weight)
DEFAULT WEIGHTS:
Dimension 1 (Value): 20%
Dimension 2 (Counterparty): 15%
Dimension 3 (Data): 25%
Dimension 4 (Term): 10%
Dimension 5 (Type): 10%
Dimension 6 (Jurisdiction): 10%
Dimension 7 (Negotiability): 10%
────
100%
Weighted Score Example
EXAMPLE: SaaS Contract
Dimension 1 (Value): $150K → Score 3 × 20% = 0.60
Dimension 2 (Counterparty): Series B startup → Score 3 × 15% = 0.45
Dimension 3 (Data): Customer PII → Score 5 × 25% = 1.25
Dimension 4 (Term): 2 years → Score 3 × 10% = 0.30
Dimension 5 (Type): SaaS → Score 2 × 10% = 0.20
Dimension 6 (Jurisdiction): Delaware → Score 2 × 10% = 0.20
Dimension 7 (Negotiability): Their paper → Score 3 × 10% = 0.30
TOTAL RISK SCORE: 3.30
CUSTOMIZATION REQUIRED:
┌─────────────────────────────────────────────┐
│ Your dimension weights: │
│ │
│ Value: _____% │
│ Counterparty: _____% │
│ Data exposure: _____% │
│ Term: _____% │
│ Contract type: _____% │
│ Jurisdiction: _____% │
│ Negotiability: _____% │
│ │
│ Total: 100% │
└─────────────────────────────────────────────┘
Risk Levels
Score Interpretation
| Score Range |
Risk Level |
Review Approach |
| 1.0 - 1.5 |
Low |
Self-service or light-touch |
| 1.5 - 2.5 |
Medium |
Standard review |
| 2.5 - 3.5 |
High |
Full review, senior legal |
| 3.5 - 5.0 |
Critical |
Priority review, exec involvement |
Risk Level Actions
LOW RISK (1.0 - 1.5):
───────────────────
□ Self-service with checklist
□ Or light-touch legal review
□ Standard approval authority
□ Turnaround: 1-2 days
MEDIUM RISK (1.5 - 2.5):
────────────────────────
□ Standard legal review
□ Manager approval
□ Document any deviations
□ Turnaround: 3-5 days
HIGH RISK (2.5 - 3.5):
──────────────────────
□ Full legal review
□ Senior legal involvement
□ Business sponsor required
□ Director approval
□ Turnaround: 5-7 days
CRITICAL RISK (3.5 - 5.0):
──────────────────────────
□ Priority legal handling
□ GC/CLO awareness
□ Cross-functional review
□ Executive approval
□ Board notification (if threshold met)
□ Turnaround: As needed
Risk Scorecard
CONTRACT RISK SCORECARD
═══════════════════════
CONTRACT INFORMATION
────────────────────
Contract Name: _________________________
Counterparty: _________________________
Type: _________________________________
Value: $______________________________
Term: ________________________________
DIMENSION SCORES
────────────────
Score Weight Weighted
(1-5) % Score
Dimension 1: Value [ ] × [ ]% = [ ]
Dimension 2: Counterparty [ ] × [ ]% = [ ]
Dimension 3: Data Exposure [ ] × [ ]% = [ ]
Dimension 4: Term [ ] × [ ]% = [ ]
Dimension 5: Contract Type [ ] × [ ]% = [ ]
Dimension 6: Jurisdiction [ ] × [ ]% = [ ]
Dimension 7: Negotiability [ ] × [ ]% = [ ]
────────────
TOTAL RISK SCORE: [ ]
RISK LEVEL: □ Low □ Medium □ High □ Critical
RECOMMENDED REVIEW: ________________________
APPROVAL AUTHORITY: ________________________
SCORED BY: _____________ DATE: _____________
Override Triggers
Automatic Escalation
Regardless of calculated score, escalate to next level if:
| Trigger |
Action |
| Sensitive data (PHI, financial) |
Minimum: High |
| Government/public sector |
Minimum: High |
| Strategic relationship |
+1 level |
| First contract with counterparty |
+1 level |
| CEO/Board counterparty |
Minimum: Critical |
| Press/PR implications |
+1 level |
| Regulatory implications |
Minimum: High |
Manual Override
OVERRIDE DOCUMENTATION:
──────────────────────
Contract: _____________________
Calculated Risk Level: ________
Override Risk Level: __________
OVERRIDE RATIONALE:
□ Strategic importance
□ Executive request
□ Risk factors not captured in scoring
□ Other: _________________________
Explanation: ___________________
_______________________________
Approved by: ___________________
Date: _________________________
Portfolio Risk View
Aggregated Risk Tracking
PORTFOLIO RISK DASHBOARD
────────────────────────
BY RISK LEVEL:
Low: [████████████████] 45 contracts ($2.1M)
Medium: [████████████ ] 28 contracts ($4.5M)
High: [████████ ] 15 contracts ($6.2M)
Critical: [██ ] 5 contracts ($3.8M)
RISK CONCENTRATION:
- Highest counterparty exposure: $X with [Vendor]
- Highest data risk category: [Category]
- Contracts expiring next quarter: [X] ($Y value)
ACTION ITEMS:
- [X] contracts require renewal review
- [Y] contracts past review date
- [Z] contracts in critical status
Integration with Intake
Pre-Scoring at Intake
INTAKE FORM + RISK SCORE:
When legal request submitted:
1. Requestor answers scoring questions
2. System calculates preliminary score
3. Auto-routes based on risk level
4. Legal validates/adjusts score
5. Review proceeds at appropriate level
1. What is the total contract value?
□ Under $25K □ $25K-$100K □ $100K-$500K □ $500K-$1M □ Over $1M
2. Who is the counterparty?
□ Fortune 500/Public □ Established mid-market □ Growth-stage
□ Early-stage startup □ Unknown/Individual
3. What data will they access?
□ None □ Internal only □ Employee data
□ Customer data □ Sensitive (PII/PHI/financial)
4. What is the contract term?
□ Month-to-month □ Under 1 year □ 1-2 years
□ 2-3 years □ Over 3 years
5. What type of contract?
□ NDA □ PO/Order form □ SaaS □ Services
□ MSA □ Licensing □ Partnership □ Other
6. What jurisdiction/law applies?
□ Our state □ Other US □ Canada/UK/EU □ Other
7. Whose paper?
□ Our template □ Our template modified □ Negotiated
□ Their standard paper □ Their non-negotiable
Resources
references/
- scoring-calibration-guide.md — How to calibrate scores for your organization
- override-criteria.md — Detailed override trigger documentation
- portfolio-reporting-guide.md — Risk portfolio analytics
scripts/
- risk-scorer.py — Calculates risk score from inputs
- portfolio-analyzer.py — Aggregates risk across contracts
assets/
- scorecard-template.xlsx — Excel risk scorecard
- dashboard-template.xlsx — Portfolio risk dashboard
- intake-scoring-form.docx — Intake form with scoring