What are key elements of a contract administration risk assessment?

• A. Focus only on budget risks.
• B. Identify hazards, probability, impact, controls, owners, monitoring indicators, and residual risk.
• C. Focus only on schedule risks.
• D. Focus only on supplier ethical issues.

Answer: (B)

The main idea is to take a structured, comprehensive view of what could go wrong in contract administration and turn that into an actionable plan. You start by identifying potential hazards or risk events that could affect the contract. Then you assess how likely each risk is (probability) and how severe the consequences would be if it occurred (impact). With that understanding, you determine what controls or mitigations are in place or needed to reduce those risks and assign clear owners who are responsible for managing each risk. You also define monitoring indicators to track whether the risks are changing and whether the controls are working effectively. Finally, you consider residual risk—the amount of risk left after applying controls—to decide if additional actions are required.

This broad approach is best because it ensures nothing important is overlooked beyond a single area like budget, schedule, or supplier ethics. By including ownership, monitoring, and residual risk, you can proactively manage how risks evolve, respond to changes, and demonstrate accountability throughout the contract lifecycle.