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Executive Concerns: Change, Commitment, Compliance

February 13, 2014

Managing growth in an environment of uncertainty is the overall concern that emerges from a recent survey of business executives. They fear regulation, the potential for market volatility, the possibility of disruptive innovation and the inability of their organization to adapt sufficiently fast.

The top risks all have impact upon contracting and commercial practices. For example, the fear of regulatory changes and increased regulatory scrutiny clearly drives the need to ensure oversight of commitments, market practices and supplier integrity. On the other hand, risks such as economic uncertainty restricting growth, difficulty acquiring new customers and volatility in global financial markets call for new or adaptive commercial offerings and contract terms that enhance competitiveness and improve controls. Specific terms and conditions are also likely to face renewed attention – for example, those related to data security / privacy and managing exposure to cyber threats.

Overall, this should represent a busy time for anyone working on contract strategy and policy, with the evident need to balance creativity and control. Businesses need new commercial models and offerings in order to compete, yet at the same time must improve oversight of compliance and enable greater agility in their contract relationships. Approaches to financing, to currency hedging, to systems for contract and performance management appear critical in the environment executives describe. At the same time, research into the contract terms that will support winning in the market, enabling new business models, may prove critical. Regulatory and reputational concerns are likely to translate into growing interest in the development of industry standard terms and practices, to raise confidence in levels of compliance and as a defense against charges of failure.

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