Defining Risks
The Risk Scale
You may configure a risk scale to stack-rank contract risks. The risk scale you set is dimensionless. You can set a risk scale with as few as four values up to thousands (there is no upper limit, but adding scale granularity negatively affects page load performance.) More risk values offer more stack ranking granularity at the cost of significance and ease of use. Risk rankings are not exclusive: you can assign the same risk ranking to multiple discrete provisions.
Note
It is a best practice to start with a ten-unit scale (1-4: low risk; 5-7: moderate risk; 8-10: high risk) as you become familiar with risk ranking. As you add provisions and gain confidence in your rankings, you can add risk score values as appropriate for your needs.
Individual Risk Scales
The individual risk scale is for assessing the risks attendant to every activated provision. When setting risk scales, assess and rank the risks associated with each provision as described in To set the risk scale, for each risk value (for high- and low-risk results at a minimum). You can rank each provision by risk or assign a coarse low/moderate/high value (1–2, 3–4, 5–6) to all provisions.
Total Risk Scales
While the individual risk scale ranks individual provisions' risks, the total risk scale scores the aggregate of individual risks in an agreement. The total risk scale is the sum of all individual risk scores associated with a document. Set this scale as described in To set the risk scale. Make sure the upper boundary is greater than or equal to the sum of all activated individual high risks, or do not set an upper total risk boundary.
To set the risk scale
- Click Define Risk Scale in the left column to open the Define Risk Scale screen.
- Select either Individual Risk Scales or Total Risk Scales.
- Lower bounds start from 1. For the first scale, set the upper bound to 2 or more, set the risk level to Low Risk, Moderate Risk, or High Risk, and assign one of four risk icons to the risk level.
- Set the next risk scale in the same fashion. The bottom bound of the scale is automatically set to the preceding risk level value, plus one. Two risk-level lines is the minimum permissible risk scale.
- You may set as many risk level lines as you want, but there is no logical reason to set more than four lines (corresponding to the number of available risk icons).
- Click Save.