Document risk
Document risk
/ˈdɒkjʊmənt rɪsk/ (n.)
The risk an organisation faces that loses money because of substandard legal contracts with its customers.
The ordinary means of defending against document risk is, therefore, to treat contract negotiation as some kind of engagement with terrorists, or at least hostile foreign powers, and to leave absolutely nothing to chance.
Of course, when you treat a customer like a presumptive criminal, it will tend to behave like one — this is the lesson of the Stanford Prison Experiment — as as a result commercial contracts look less like the exchange of lavender scented love-letters you would expect from long term partners in commerce, and more like downtown Beirut in 1976 just after a particularly vigorous shelling.
Knowing one has a portfolio of such battle hardened contracts bestows great comfort on senior personnel in credit and legal that all bad things that could come to pass have been anticipated by the battery of preternaturally paranoid legal experts they have in their negotiation battalions. As such, these senior boxwallahs will hold forth at the merest invitation about the imperative of having “strong docs” as they see it, and will cite in support of their proposition the collossal resources the firm commits to its client documentation effort.
A fool rushes in to pop a credit officer’s balloon where angels fear to tread, but that has never stopped us. We think this is a false comfort. Our evidence is purely, but compendiously, anecdotal.