Winning Bids Embrace Risk - And Win More Often
Why Risk is an Advantage
Many bid teams treat risk management as a hurdle, something to get past to focus on winning. That is a mistake. Risk, when used strategically, enhances credibility, sharpens strategy, and differentiates you from competitors. The key is integrating it into the win strategy rather than treating it as a formality.
Customers know projects carry risks. A bid that ignores them raises red flags. One that acknowledges and mitigates risks builds trust. In competitive bidding, trust is as valuable as price and capability. A proposal that demonstrates a deep understanding of risk and outlines a proactive mitigation plan positions the bidder as a competent, reliable partner.
Handled well, risk identification:
Uncovers hidden project risks. Recent studies have shown that a significant percentage of projects face challenges or fail outright, with some research indicating that up to 60% of projects may be affected. These challenges are often due to unaddressed risk factors apparent during the bid phase. Implementing proactive risk management strategies can significantly improve project outcomes and success rates.
Strengthens pricing and delivery terms. By incorporating risk-based pricing, bidders can justify cost structures with data-backed projections, making negotiations smoother.
Positions you as proactive, not reactive. Proactive risk management signals to clients that your team has thought through contingencies, reducing uncertainty and increasing confidence in your ability to deliver.
Embedding Risk into the Win Strategy
1. Identify Risks Early
Waiting until the end limits options. Risk identification should run from the point that an opportunity is identified. Early identification of risk enables more effective mitigation and enhances the credibility of your proposal. Research by McKinsey indicates that large IT projects run 45% over budget and 7% over time, often due to risks not identified during the bid stage.
Example: A technology service provider bidding for a multi-year managed services contract identified the risk of obsolescence in the proposed hardware stack. By proactively addressing this, they included a hardware refresh clause that reassured the client while giving them a pricing advantage over competitors who had ignored the issue.
2. Quantify and Mitigate
A vague acknowledgment of risk does little to build credibility. Assign probabilities and business impact to risks to give them tangible weight.
Use risk matrices to categorise likelihood and severity.
Detail mitigation steps with associated cost-benefit analyses.
Showcase past success in mitigating similar risks.
Example: A financial services firm bidding for a government contract recognised the risk of regulatory changes affecting compliance costs. By presenting a risk-adjusted model with compliance contingencies, they demonstrated superior foresight and won the bid over a competitor who simply assured they would "adapt as needed."
3. Align Risk with Pricing & Terms
Use risk-based pricing, service level agreements (SLAs), and shared risk models to balance cost and confidence. Clients are often willing to pay a premium for certainty and transparency.
Offer tiered pricing based on risk acceptance.
Structure milestone-based payments to mitigate delivery risks.
Include shared risk clauses where applicable.
Example: A logistics company bidding for a major supply chain contract proposed an innovative risk-sharing model where both parties contributed to an emergency contingency fund. This creative risk allocation demonstrated alignment with the client’s priorities and resulted in a successful award.
4. Make Risk Part of Your Story
Risk should be in the core narrative, not fine print. Demonstrating how your risk strategy protects the customer and ensures success differentiates your bid.
Use case studies to illustrate risk mitigation in action.
Highlight risk intelligence as a competitive advantage.
Showcase executive commitment to risk governance.
Example: An IT firm competing for a cybersecurity contract emphasised its proactive risk approach by sharing a case study of how early risk detection prevented a major data breach. This real-world example resonated with the client and underscored the firm's competence.
5. Build a Risk-Smart Culture
Winning bidders embed risk awareness into their team culture. This ensures that risk management is not just a compliance function but a strategic advantage.
Encourage early risk discussions to integrate mitigation into bid strategy.
Train teams to think in terms of risk-adjusted returns, not just technical viability.
Reward proactive risk identification and innovative mitigation approaches.
Example: A multinational energy company implemented a bid risk management framework that incentivised teams to propose innovative risk mitigation strategies. This resulted in a measurable increase in successful, profitable bids, reducing post-contract disputes significantly.
Winning with Risk
Great bids do not avoid risk - they understand, manage, and use it to win. A risk-aware bid team secures profitable deals, protects delivery, and earns trust. In industries where reputation and reliability matter, the ability to demonstrate superior risk management capabilities can be a deciding factor in winning business.
Risk, when harnessed effectively, is not an obstacle, it is an opportunity