How to calculate deal risk in negotiation
Our lack of skill in negotiating complex, multi-party deals may be the death of the planet.
Before the collapse of the Soviet Union in 1989, only two countries bordered the Caspian Sea: Iran and the USSR.
Now Iran, Russia and Kazakhstan, Turkmenistan, and Azerbaijan all border it and have been unable to negotiate fishing limits.
The Caspian sturgeon population, and thus the world production of Beluga caviar is under threat.
Negotiating with multiple parties invariably multiplies the risks. In fact, deal risk increases exponentially as the number of parties you have to negotiate with increases.
To calculate your deal risk in an upcoming negotiation, square the number of the parties you will have to negotiate with. If you are negotiating with just one other party, the risk level is 1 (1 x 1). If you are negotiating with two other parties the deal risk is 4 (2 x 2). If your deal involves 5 parties the deal risk escalates to 25 (5 x 5).
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posted in Deal Preparation, Managing Big Complex Deals, Managing Risks | 0 Comments
