Best Practices in Managing Risks in Contracts and Outsourcing

Programme Objective

We read in the press that some high-profile contracts had failed miserably leading to costly litigation and major dent on their reputations. For century, contracts have been in the core of every business transaction small or big. The ability of a corporation in managing contract risk have been proven to be one of the main factors of survival, especially during volatile economy when non-performance and default run high. From procurement and sales contract to outsourcing contract and service level agreement, various risks and hidden pot-holes await the unsuspecting management team. From internal fraud risk to external litigation – managing contract risk have always been the major concerns of CEO, financial controller, procurement officer and the auditors. This course aims to shade lights on how to manage risks in contracts and outsourcing

Upon completion of this course, the participants will • Appreciate that creating a right contract can save many pitfalls in the future • Able to identify the key phases in contract life cycle • Understand the major risks in each phase of the outsourcing management • Managing the fraud risk in procurement and outsourcing

Programme Outline

1. Overview of Contracts and Type of Contracts • Legal Aspect and Integrals of Contracts • Offer, Acceptance, Consideration, Intention to Create Legal Relationship • Revenue, Procurement (Tangible and Services), Outsourcing • Corporate Transaction Contracts (Share or assets)

2. Contract terms and Outsourcing terms • Unfair, invalidity terms and conditions • Duration and penalties for early termination • Survivorship – matters that continue after the contract terminates • Main contractors and sub-contractors • Warranties, Quality, Service Level and performance bonds • Fees and costs, price limitations, ceilings and movements • Invoicing and payment, overpayments, underpayments • Contractor payments and performance • Cost control, Change management (variation order)

3. Risks in Contracting and Outsourcing • Managing Risk of Counterparty, Legal, Performance, Credit, AML • Risk Management – Minimize, Transfer, Avoid, Absorb • Managing Internal Contracting risk – Fraud and Corruption

4. Contracting Process Overview • Pre-contract due diligent (KYC, KYV, Creditworthiness) • Contract Negotiation (Terms, Jurisdiction, LD, Bonds, Force Majeure) • Negotiation – Beware of Psychologies Manipulation. • Contract Legal Review (Meaning, benefit, worse-case scenario) • Post Contract Monitoring

5. PPSS Approach in Managing Fraud and Corruption Risk in Contracting • People, Process, System, Strategy • Prevention, Detection and Deterrence framework (Proactive) • Investigation and Correction framework (Reactive) • How Data Analytics and Document Review can help

6. Outsourcing Management • OEM/D counterparty – Quality, Material Control, Cost, Settlement, • Confidentiality, IP protection consideration • Outsource services (labour, SSC, hotline, etc) – Service Level monitoring

7. Reviewing outsourcing contracts - about to begin • Early stage review • Mid-Maturity review • End-of-life review

8. Resolving Dispute and conflict • Performance monitoring mechanism – early detection • Credit and security bond management • Dispute resolutions – mediation, arbitration, litigation

Target Audience

• CFO, Finance Managers, Accountants
• Procurement Manager, HR managers
• Internal auditor, Audit manager, audit directors
• Control and compliance officers, Risk manager,
• Forensic auditor, Loss prevention and Fraud Prevention Officer
• External auditors, Regulatory agency staff

Training Methodology

Presentation, group discussion, case study. Multimedia and template sharing

Programme Facilitator

Kent Hoh is a prolific trainer in audit, fraud investigation, corporate governance and personal effectiveness. Kent Hoh has wide ranging experience in leading compliance and audit functions in Asia Pacific as well as forensic investigation team globally.

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