Contract risk management assesses and manages contract risk throughout the life cycle of the contract. Assess contract risk in terms of missed business prospects, legal exposure to unanticipated occurrences, and the possible commercial effect of contracts with your company. You must be able to identify the exact degree of risk contained in the contract at each point of the contract life cycle. Companies can reduce the risks of jeopardizing profitability and feasibility in a variety of ways. Contract risk management is the most popular method for dealing with and mitigating risk. Before signing a contract with a certain vendor or partner, this procedure identifies the risks and attempts to manage those risks through contract negotiation and contract writing..