5 Inevitable Contract Clauses That Mitigate Third-Party Risk

Introduction

When considering a relationship with a third-party, you might have already gone the extra mile by conducting an enhanced due diligence program, identifying your risks, and ranking your red-flags. But what should your next step be? What happens if your in-depth due diligence reports are not followed by risk-based contract clauses? Due diligence programs are designed to identify and mitigate potential risks associated with beginning relationships with third-parties. There is no beneficial investment however, if the program's findings are not integrated with tailor-made contractual protections.

The contracting process is where you should comprehensively benefit from due diligence, by mitigating and managing your risks. Your agreement should be structured in accordance with the scope and nature of the third-party relationship. The provisions regarding parties' rights and responsibilities, performance standards, contract value, qualifications of the