Intro:
Cenza has experience handling contract management projects in all business sectors, from banking to insurance to energy exploration. Each assignment comes with a unique set of challenges, but with our workflow expertise and state-of the-art technology, we excel in bringing the highest degree of accuracy to bear in analyzing and summarizing each client’s contract data, working to scale, no matter what the industry happens to be.
The Client:
- The world’s leading banks turn to Cenza for contract management help
A top-tier global bank operating in more than 80 countries worldwide. After a series of mergers, which combined disparate technology platforms, the bank was looking to establish a global contract database, populated with more than 40,000 active agreements.
The Challenge:
- Providing the data so the client can better assess global risk
Although all the contracts were going to be stored in a single repository, the client had only limited access to meaningful data and limited understanding of financial risk across the entire organization, tied either to particular counterparties, commodities or other potentially significant credit events. Our assignment was to help the client create a contract and risk data matrix and then analyze all 40,000 contracts based on that schema, to enrich the search capability of the contract database.
The Solution:
- Building a schema for analyzing client contract data
- A meticulous process to ensure quality control
40,000 contracts are a lot to review and summarize. But the journey of contract management always starts the same way by constructing a data matrix. Here are the key steps we followed:
- Analyze the different contract types, which in this case involved up to 100 different agreement types, such as loans, guarantees, swaps, derivatives, etc., in many cases with multiple versions and regional variations.
- Assemble a team of attorneys experienced in banking and finance. Working with the client’s in-house team, they are tasked with developing a data scheme that covers each contract type. The team also develops guidelines for data abstraction in each category. This work product is then reviewed, revised and approved by the client.
- Then we launch a pilot test to evaluate how the data schema and project guidelines perform in action. After training, an initial team begins reviewing and abstracting multiple batches of contracts, and their work product gets carefully scored for accuracy. After each batch, the guidelines are fine tuned to improve accuracy on the next batch. On this project, we ran 7 batches of test data until we were satisfied we had achieved a suitable accuracy scoring.
- Live operations commence with a core team whose performance is carefully monitored. The document delivery rate is gradually increased and the team expanded in order to achieve the target run rate, while our quality review team continuously monitors performance.
The Impact:
- Delivering long term value through improved risk management
The client emphasized to us that data accuracy is absolutely critical for purposes of performing global risk assessment. That’s why we took such pains every step of the way, and ended up exceeding the client’s requirements with a cumulative quality assessment scoring above the 98th percentile. We completed the assignment on time and with an estimated cost savings of more than 35% below what the client’s internal cost would have been. The real payoff for the client came two years after we completed the assignment. Our project manager received a call from the client explaining how valuable our services turned out to be. When a large counterparty had gone into bankruptcy, thanks to the accuracy of Cenza’s work, management had been able to respond quickly and decisively mitigated its losses. Contract management when done properly provides a long-term benefit in risk management that goes beyond the immediate ROI. It shows up in ongoing improvement to a company’s bottom line, long after the project is done.
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