The last of the four elements of the STAR analysis is Risk.
Risk v Reward
When reviewing your contract, remember that there is a balance to be struck between risk and reward (benefits v harm).
If your deal seems too good to be true, it often is.
In construction, the aim is to take measured risks. However, even the courts recognise that not every risk is worth taking:
“…the project may be alluring. But the risks of injury to those engaged in it, or to others, or to both, may be so manifest and substantial and their elimination may be so difficult to ensure with reasonable certainty that the only proper course is to abandon the project altogether. Learned Counsel… appeared to regard such a defeatist outcome as unthinkable. Yet circumstances can, and have at times arisen, in which it is plain commonsense and any other decision foolhardy. The law requires even pioneers to be prudent”
For every risk related to a contract or a project you should understand:
- the precise meaning of that risk
- likelihood of the risk occurring and its impact on the project or contract
- how that risk will be managed if it occurs
- who bears contractual responsibility for the consequences of that risk
- whether you can pass on that responsibility, share it or insure against it
- the reward you are getting for taking a risk
Case: Independent Broadcasting Authority v EMI and BICC Construction  PNLR 179, HL Lord Edmund-Davies.