Uncovering the Hidden Risks of Poor Contract Management

Malbek’s Colin Levy discusses how corporations’ lack of visibility into their contractual obligations leads to poor contract management, resulting in financial, legal, operational, and strategic risks. The consequences are missed renewals, lost revenue, compliance failures, and costly inefficiencies. 

For instance, poor contract oversight can result in an annual revenue leakage of up to 9.2% due to missed discounts, unauthorized terms, or auto-renewals. Legal risks are equally severe, with non-compliance leading to multimillion-dollar fines and reputational damage. The inconsistent application of terms and untracked changes in regulations exacerbate these liabilities.

Operational inefficiencies also take a toll. Delays in approvals, duplicative efforts, and manual data entry lead to wasted resources and slow decision-making. These inefficiencies impact productivity and diminish competitiveness. Security lapses compound the problem, as contracts often contain sensitive information that, if inadequately protected, can lead to data breaches and unauthorized disclosures.

Beyond internal harm, poor contract management strains external relationships. Missed obligations erode trust and escalate disputes. Moreover, fragmented contract visibility limits leadership’s ability to make informed strategic decisions, which in turn impacts vendor consolidation, cost savings, and risk mitigation efforts. 

Traditional tools, such as spreadsheets and shared drives, are no longer sufficient. Modern contract lifecycle management platforms offer centralized storage, automated workflows, real-time alerts, analytics, and integrations that turn contracts into active business assets. In addition, process automation, electronic signatures, and guided workflows help reduce inefficiencies, while AI-driven tools flag regulatory issues and high-risk provisions. 

These technological capabilities transform the way organizations manage contract risk, shifting the focus from reactive problem-solving to proactive oversight and control. With the right tools, contract management evolves from a back-office burden to a strategic capability that delivers measurable business value.