Management of risk – The co-operative way

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Management of risk – The co-operative way

Date \| Version	August 29, 2022 \| 1.0
Keywords	Risk, Risk Management, Co-operation, Contractual Arrangements
Jurisdiction	India

Introduction

Risk is omnipresent. The challenge lies in identifying risks, assessing risks, evaluating risk mitigation measures, and effectively implementing such measures. While risk can rarely be eliminated entirely, it can be managed through a structured and balanced approach.

This article focuses on contractual arrangements entered into by businesses and provides insight into the philosophy of risk allocation within such arrangements. Although contracts vary significantly in nature, a key factor in successful contract implementation is co-operation among the parties involved.

A contract that addresses risks in an equitable manner is more likely to encourage collaboration and mutual support. Balanced risk allocation often promotes diligence, accountability and active participation from all parties, rather than burdening one party with disproportionate responsibilities.

The article explores the principles of co-operative game theory in risk management, including value creation, equitable distribution of risks, and goal-oriented risk allocation strategies. It highlights how a collaborative approach to risk management can contribute to successful contract implementation while reducing negotiation costs and potential disputes.

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Management of risk – The co-operative way

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