Features
Risk Analysis
Comprehensive guide to OutRiskAI's automated risk detection, severity scoring, risk categories, and assessment methodology.
OutRiskAI's risk analysis engine uses advanced NLP and Gemini 2.5-flash models to evaluate contract text, isolate liabilities, and assign structured severity scores.
Every identified risk is assigned a severity rating (High, Medium, Low), an impact description, and specific mitigation steps.
Risk Severity Matrix
┌─────────────────────────────────────────────────────────────┐
│ Severity Scale │
├─────────────────┬─────────────────┬─────────────────────────┤
│ Severity Level │ Score Index │ Recommended Action │
├─────────────────┼─────────────────┼─────────────────────────┤
│ 🔴 High Risk │ 70 - 100 │ Do not sign without │
│ │ │ negotiation or legal │
├─────────────────┼─────────────────┼─────────────────────────┤
│ 🟡 Medium Risk │ 40 - 69 │ Review & attempt to │
│ │ │ improve terms │
├─────────────────┼─────────────────┼─────────────────────────┤
│ 🟢 Low Risk │ 0 - 39 │ Acceptable; minor │
│ │ │ administrative review │
└─────────────────┴─────────────────┴─────────────────────────┘🔴 High Severity Risks (70 - 100)
Issues that represent severe financial exposure, loss of intellectual property, or unfair legal burden:
- Unlimited Liability: Absence of an aggregate liability cap.
- Unfavorable Jurisdiction: Mandatory dispute resolution in expensive or distant foreign courts.
- Broad Indemnification: Requirement to indemnify third parties for claims beyond your control.
- Automatic Renewal Traps: Auto-renewal with short notice windows (e.g., 90-day requirement).
🟡 Medium Severity Risks (40 - 69)
Operational or commercial friction that should be negotiated:
- Extended Payment Terms: Net-90 or Net-120 payment terms without interest protections.
- Vague Deliverable Criteria: Unclear specifications leading to scope creep.
- Unilateral Termination: One party may terminate for convenience while the other cannot.
🟢 Low Severity Risks (0 - 39)
Administrative inconsistencies or minor language ambiguities:
- Missing contact definitions or notice address formatting.
- Minor typo variations in defined terms.
Primary Risk Categories
| Category | Description | Example Risk |
|---|---|---|
| Financial | Exposure to unexpected costs, penalties, or fee increases | Net-90 payment terms with 5% monthly late penalty |
| Legal | Unfavorable dispute resolution, jurisdiction, or indemnity | Waiver of jury trial & foreign court jurisdiction |
| Operational | Deadlines, SLA guarantees, and deliverable specifications | No service credits for vendor platform outages |
| Compliance | Data privacy (GDPR/CCPA) and regulatory non-compliance | Unrestricted sharing of customer data with third parties |
| Termination | Exit conditions, notice windows, and post-term obligations | 120-day advance notice required to prevent auto-renew |
Scoring Methodology
The overall contract risk score is computed as a weighted index across identified clause risks:
Risk Index = SUM( (Impact * 0.60) + (Likelihood * 0.40) ) * Context Multiplier- Impact (0 - 100): Magnitude of potential legal or financial damage.
- Likelihood (0 - 100): Probability of the clause causing operational friction.
- Context Multiplier: Adjusted based on contract type (e.g. higher stringency for vendor SaaS contracts vs internal NDAs).