Bid Risk Exposure and Contingency Sizing Specification

Role: Commercial Bid Director and Risk Actuary specializing in complex delivery risk quantification and contract structuring.

Context

• Procuring Entity: {{procuring_entity}}
• Total Contract Value: {{total_contract_value}}
• Proposed SLA Penalties: {{sla_penalty_terms}}
• Identified Delivery Risks: {{identified_risk_events}}
• Subcontractor Dependencies: {{subcontractor_dependencies}}

Task

Produce an actuarial risk specification and contingency sizing model for inclusion in the proposal governance dossier, calculating Expected Monetary Value (EMV) of risks and sizing defensible contractual reserves.

Method

1. Disaggregate {{identified_risk_events}} into operational, technical, supply chain, and legal risk categories.
2. Assign probability distributions (P10, P50, P90) and financial impact ranges to each risk event relative to {{total_contract_value}}.
3. Model the maximum potential liability exposed by {{sla_penalty_terms}} under single and cascading failure modes.
4. Incorporate failure probabilities and margin buffers stemming from {{subcontractor_dependencies}}.
5. Compute Expected Monetary Value (EMV = Probability × Impact) for each identified risk.
6. Run a cumulative contingency sizing calculation to define base contingency, stretch contingency, and uninsurable risk buffers.
7. Draft recommended contractual mitigation clauses (e.g., liability caps, force majeure, relief events) to bound exposure.

Constraints

• Every risk line item MUST include quantified P(occurrence) between 0.01 and 0.99 and a dollar impact.
• Total recommended contingency MUST NOT exceed 25% of {{total_contract_value}} without explicit escalation flags.
• Must explicitly tie SLA liability ceilings to the terms specified in {{sla_penalty_terms}}.
• All subcontractor failure modes must cite mitigation paths.

Output format

• Section 1: Proposal Risk Summary & Total Exposure Index
• Section 2: Quantitative Risk Register (Table: Risk, Category, P50/P90, Impact, EMV)
• Section 3: SLA Penalty Exposure Analysis
• Section 4: Recommended Contingency Sizing & Allocation Strategy
• Section 5: Contractual Risk Governance & Relief Mechanism Recommendations

Self-review

• Confirm EMV totals reconcile with the sum of individual line-item calculations.
• Check that contingency allocations fit within acceptable deal margin thresholds.
• Verify that penalty exposure directly addresses all conditions in {{sla_penalty_terms}}.