5 Contract Management Security Risks and How to Mitigate Them

5 Contract Management Security Risks And How To Mitigate Them

Threats and vulnerabilities are inevitable in the contract lifecycle, especially when handling sensitive information. Taking a proactive approach to identifying and mitigating contract management security risks can help businesses to achieve the bottom line without legal, financial, or reputational ramifications.


Whether in file cabinets or shared folders, contract management security is a top concern for businesses. Business agreements hold an organization’s most confidential and sensitive data, from financial details to client information to legal strategies. There is always the potential for data breaches when so many different departments and parties are involved in the contract lifecycle.

At a time when most of the world is moving towards digital contracts and remote workspaces, businesses must take special care to establish contract management security. In the event of mishandled contractual agreements, no company can escape unscathed. Contract security breaches can expose organizations to financial, legal, and operational ramifications. It can cast a shadow on every business relationship going forward. That is why, in today's blog, we will discuss the top contract management security risks and how to mitigate them.

What is contract management security?

Contract management security refers to all the steps and systems organizations use to protect contractual agreements throughout their lifecycle.  Every contract that falls under the purview of an organization contains a wealth of sensitive data regarding its personnel, clients, policies, and procedures.  Contract management is a critical process in business operations, and it involves handling sensitive information and legal agreements. Well-thought-out and proactive security measures are necessary to guarantee data protection and avert breaches. 

Contract management security isn’t limited to protecting confidential information from external threats; there are internal issues to worry about too. Throughout the contract lifecycle, a lot can happen within an organization, including compliance problems, unauthorized access, and improper contracting procedures. Here are five common security risks in contract management and strategies to mitigate them:

               Risk 1: Data Breaches

Contracts contain an abundance of valuable data, including financial details, intellectual property, trade secrets, and personally identifiable information. The contracting process involves numerous stakeholders, departments, and outside collaborators, making it difficult for most scaling organizations to maintain data integrity. Furthermore, the security risks are endless for organizations that continue to rely on manual processes and physical documents to manage contracts.

There’s a viable threat to contract management security due to data breaches through hacking, insider threats, third-party vulnerabilities, or unintentional data exposure. Unauthorized access to contractual agreements can also result in data breaches. It can lead to leaks of sensitive information, financial loss, and damage to the organization's reputation. The affected organization may face fines, lawsuits, and disrupted business operations. It is in every company's best interest to ensure contract data security because the repercussions of breaches are severe and lasting.


Centralized digital storage for all contracts and related documents is the first step toward contract data protection. It ensures there is no possibility of displacement or damage to contractual agreements. Cloud-based storage brings organization and security to active and inactive contracts. All the files are readily available in a single place without the threat of unintentional exposure.

One way to go about it is to use digital repositories accessible through contract management solutions. But is it safe to save confidential documents on third-party sites? Not to worry, we have a solution for that as well! We implement the Dock CMS solution on top of your existing Microsoft 365 environment. It utilized SharePoint lists and libraries for data storage and document management. So all the contract data and related documents are stored within your archive and nothing goes out or comes in without your knowledge.

             Risk 2: Insider Threats

 Insider threats pose a significant risk to contract management security because individuals with authorized access to sensitive contract data may misuse their privileges intentionally or unintentionally. These individuals can be current or former employees, contractors, vendors, or partners with access to confidential information within the organization. 

Not all insider threats are intentional; some arise due to careless behavior. Employees may inadvertently mishandle contract documents, leave them unattended, or share them with unauthorized individuals, leading to data exposure and potential breaches. When organizations depend on manual processes to manage the contract lifecycle, it can lead to human error, compliance issues, irregular workflows, and invariably incompetent legal agreements.  

Contract Management Software on Microsoft 365


Organizations must adopt the principle of least privilege, where individuals only have access to the data necessary for their role. Organizations can utilize role-based access to bring accountability and structure to the contracting process. For instance, in Dock 365, organizations can dictate site permissions for their employees and parties depending on their roles. Limiting access through visitor (read-only) and member permissions (view and edit content) can help maintain data integrity throughout the contract lifecycle. 

Customizable dashboards help to avoid unintentional exposure of sensitive information to everyone involved in the contracting process. Organizations can create vendor, customer, or legal dashboards to limit the data flow and reports to specific individuals or departments. They can also conduct security awareness training to educate employees about the importance of data protection and the consequences of insider threats.

                  Risk 3:  Third-Party Risks

When organizations collaborate with vendors, suppliers, contractors, or subcontractors during contract management, there are potential risks due to the third party's practices. These external parties often have access to sensitive data and play a crucial role in successful contract execution. If they have overly permissive access to contract management systems or documents, it increases the risk of data exposure or manipulation. 

If organizations employ inadequate vetting and due diligence of third-party vendors, it can lead to partnerships with unreliable or insecure entities.  Furthermore, external vendors may not adhere to the same security standards or comply with industry-specific regulations, potentially exposing the organization to legal and regulatory risks.


Organizations must conduct thorough security assessments before engaging with third-party vendors. They can evaluate security policies, practices, and past security incidents of external parties. Vendor contract management software can help businesses oversee the whole process from a single platform. Dock VMS offers scoreboards, self-service portals, and questionnaires to record and analyze external party performance and compliance during the contract lifecycle.

The consolidated system enables businesses to keep track of third-party vendors who access contract data. They can implement audits to verify compliance with security requirements and industry standards. Also, add specific security requirements, data protection clauses, and confidentiality obligations in contracts and service-level agreements (SLAs) with third-party vendors.

                Risk 4:  Non-Compliance

Non-compliance poses a significant risk to contract management security for any business. The contracting process involves handling sensitive data and legal agreements, and failing to adhere to relevant laws, regulations, and contractual obligations can have serious consequences. There are certain industry-specific regulations (e.g., GDPR, HIPAA, CCPA) and data protection laws that every organization must follow. For instance, failure to safeguard customer data or follow proper data handling procedures can result in severe legal repercussions. 

Furthermore, organizations must strictly adhere to contractual terms and conditions. Any failure to uphold obligations can result in disputes between parties involved in the contract. Non-compliance may lead to contract terminations, litigation, or delays in project timelines. They can impact an organization's ability to participate in certain projects or work with clients and partners who have strict compliance requirements. This limitation may lead to missed business opportunities.


Firstly, organizations must stay informed about relevant laws and regulations and ensure that contract management processes align with them. They can implement obligation tracking to guarantee that all invested parties adhere to the essential terms and conditions. They can set up alerts and reminders for key dates, milestones, and compliance deadlines. Automation helps track contract performance and ensures timely action on critical events.

Accurate contract reports can help businesses identify and mitigate non-compliance risks with regulatory requirements, contractual obligations, or potential legal issues. Through customizable reports, organizations can stay on top of invoicing, payment status, deliverable status, and performance evaluations.

Automated Contract Management System

                       Risk 5: Lack of version control

Version control refers to managing changes to documents or files over time, ensuring that multiple versions of the same document are properly tracked, organized, and accessible. Poor version control and document management practices can result in contract discrepancies, unauthorized changes, and confusion over time. It becomes challenging for users to determine the most current and accurate contract version. This ambiguity can lead to misunderstandings, disputes, and potential breaches of contractual obligations.

If there is no systematic version control in place, there is a higher likelihood of data loss or corruption. It could be due to accidental deletions or overwrites, making it difficult to recover critical information. Unauthorized changes to contract terms, values, or conditions can harm the organization and its partners. It can lead to disputes, financial losses, and legal consequences.


Adopting contract management software with a centralized contract repository, version control,  and access tracking. Dock 365 provides a comprehensive document history depicting who made changes, when, and the nature of the changes. This transparency enhances accountability and enables easy identification of contributors.

Maintain a detailed audit trail of all actions related to the contract, including views, edits, and approvals. It helps in compliance efforts and investigating any potential issues. Dock 365 enables organizations to collaborate on contracts in real time without miscommunication or discrepancies. They can maintain a detailed audit trail of all actions related to the contract, including views, edits, and approvals. This helps in compliance efforts and investigating any potential issues.


Overall, a proactive and comprehensive approach to contract management security is crucial. Regular risk assessments, continuous monitoring, and ongoing employee training will help maintain the integrity and confidentiality of contract-related data and documents. Implementing strong access controls, encryption, and multi-factor authentication to restrict access to contract documents can help avoid data breaches. Organizations can regularly update and patch software to address vulnerabilities before they pose a threat to contract management security. Also, conduct periodic security audits to identify and fix potential weaknesses.

Schedule a demo with Dock 365 today to smooth sail while mitigating contract management security risks.

Disclaimer: The information provided on this website is not intended to be legal advice; rather, all information, content, and resources accessible through this site are for purely educational purposes. This page's content might not be up to date with legal or other information.
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Written by Deepti Gopimohan

As a creative content writer, Deepti has spent years assisting brands to share their unique voice with audiences, complying with the latest marketing trends and strategies. Her educational background in Literature & Journalism has helped her research and publish content for diverse industries & mediums.
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Reviewed by Naveen K P

Naveen, a seasoned content reviewer with 9+ years in software technical writing, excels in evaluating content for accuracy and clarity. With expertise in SaaS, cybersecurity, AI, and cloud computing, he ensures adherence to brand standards while simplifying complex concepts.

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