Nothing is certain in this world. When writing business proposals, your partners may overlook and not mention, intentionally or unintentionally, some of the risks present in the proposed deal. In addition, your organization may face the risks that the authors of the proposal are not aware of. This is why a vigorous risk analysis of the proposal is important. There is no set form in which to write your analysis. Still, there are some guidelines to keep in mind when devising one.
Read and understand the subject matter of the proposal. If necessary, make notes and visualize the proposal by drawing up a chart.
Identify parts of the proposed deal where things might go wrong. Consider what consequences your organization might face if the counter-party in the deal or other agents acted differently than their advertised intentions. To put it simply, analyze the risk of your partners cheating on you. Make recommendations that would minimize those risks -- for example a binding contract.
Identify the factors on which the success of the deal depends. Such factors may include the health of the economy, the availability of credit, consumer demand, the level of competition in your sector and business disruptions that may result from the introduction of new technologies.
Analyze different scenarios and the changes in the factors that influence the deal that those scenarios bring. For example, consider what might happen to the deal if the economy stops growing or dips into a recession.
Sum up all of the risks you identified in Steps 2, 3 and 4. Make conclusions as to whether your organization should agree to the proposal, perhaps changing the terms of the deal or rejecting it completely, based on your risk assessment.
- "Proposal Preparation"; Rodney D. Stewart and Ann L. Stewart; 1992
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