Contract Management Security: 5 Best Practices

All sensitive information of a company is contained in its contracts. Therefore, contract management security is enormously important for companies of all sizes, but at the same time it is often a major vulnerability.

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What is contract management security?

When working with contracts, as a company you inevitably get to the point where you start thinking about how to protect your contracts without slowing down your business or inadvertently denying colleagues inside access to your contracts. While most companies go to great lengths to restrict access to email inboxes and other internal resources, few companies invest the same time and effort into securing their contracts. Yet the content of contracts in particular usually involves highly sensitive information.

Contracts are the lifeblood of any organization. They ensure that employees are paid, that services are delivered on time, and that partnerships with companies last. Contract management security refers to systems and practices that ensure that the information contained in contracts can only be viewed by those who need it to perform their jobs.

It is often assumed that contract management security simply means protecting contracts from external threats such as data breaches and malicious actors. In this context, contract security is largely a technical issue. In such a case, the company can mandate access to company files via a virtual private network (VPN) or require that employees change their email passwords every few months.

But that’s not enough to protect contracts from malicious actors. Most organizations also need to watch out for internal security risks, such as rogue contracting (i.e., executing contracts without going through the normal approval channels) or unauthorized access to contracts. Addressing internal security risks requires a combination of technical and operational vigilance. Without clearly defined responsibilities for each step of the contract lifecycle, you cannot restrict access to enterprise contracts by role or flag unauthorized contract access.

Contracts touch all areas of an organization, so it’s no surprise that contract management security must be an enterprise-wide task.

Contract Management Security in Practice

Most companies think of contract management security in terms of tradeoffs. In their efforts to streamline business and legal processes, legal teams may introduce processes that inadvertently weaken contract security. As an example, consider access to contract templates. Legal teams that manually manage contract templates often fall into one of two traps:

  1. They slow down the business by restricting access to contract templates to the legal department. In this approach, which is the most restrictive, employees from other departments must email the legal department, sometimes under an email alias such as legal@, to request the creation of contracts. Staff are not given access to editable contract templates, and the legal department creates and sends PDF files to contractors for signature. This approach of contract management security comes at the expense of speed and efficiency, as all contract creation must be done by the legal department. However, it ensures security before and after execution because the legal department manages all contract files.

  2. The company is exposed to risks when employees create contract templates themselves and the legal department is called in for approval or review prior to execution. Allowing employees to create contracts themselves based on contract templates can speed up the phases before a contract is executed, but only if the employees create the contracts without errors. In this approach of contract management security, which emphasizes speed over full legal control, legal is brought in for approval and review once a contract is ready to be signed. That being said, employees who have access to contract templates can also send contracts out for signature even if they have not been reviewed by legal.

The same contract management security risks apply to other phases of the contract lifecycle (e.g., approval, execution, archiving). Organizations tend to adopt overly permissive or restrictive contract policies because they are unable to add guardrails to the contract process. Fortunately, new technologies are enabling teams to move from “all-or-nothing” access policies to policies that are automatically driven by requester role, contract type and other key contract attributes. This allows for a much better approach to contract management security.

5 Best Practices for contract management security

Below we have listed 5 security best practices to better handle the issue of contract management security on a day-to-day basis and provide better protection to contracts:

1. Centralize all contracts in a secure electronic repository

It is not uncommon for organizations to store contracts in shared folders in different locations and in different formats. However, centralizing contracts in a password-protected and cloud-based repository is the most important step toward high contract management security. Not only does this keep contracts organized, but it also significantly reduces the risk of the wrong people accessing them and stores them in a secure location. It also allows secure access to any document at any time from any location and any device.

2. Implementing role-based access

Another challenge with storing contracts in multiple locations is that it is impossible to regulate access levels. Once you centralize contracts online, you can set role-based permissions to increase security. This is a hugely important point in contract management security. This way, someone can read or write certain types of documents or contracts, but not have access to other contracts that would be inappropriate to edit. It also prevents unauthorized users from seeing or editing contract details.

3. Encryption of all contract data

An important Contract Management Security best practice is to encrypt all document data to protect contracts from unauthorized users. Contract data (at rest as well as in transit) should be encrypted using the latest standards AES 256-bit encryption and TLS 1.2. Data at rest refers to all data stored in the respective contract management system. Data in transit refers to all data sent externally to or from the respective contract management system to a user or other application.

4. Use of electronic signature

The most time-consuming part of any contract process is obtaining signatures and approvals, especially for those who must obtain paper signatures. Electronic signatures are a proven way to get documents signed faster. More importantly, e-signatures are more secure than paper signatures, contributing significantly to contract management security. E-signatures include a digital record of who, when, and where a document was signed to ensure authentication and support audit trails.

5. Capture contract data via secure forms

Many organizations still rely on email to request contracts and capture the necessary data to create them. This often results in incomplete or incorrect information, which costs time and poses risks to contract management security. In addition, email attachments are the most common way hackers penetrate corporate networks with malicious software. With predefined and encrypted forms, team members can quickly and accurately submit an existing contract, request the creation of a contract, or, if authorized, create a contract immediately. This ensures the integrity and security of data captured for contracts, eliminates the need for duplicate data entry or searching for missing data, and minimizes errors.


Contract management is an important process for any organization. And it is a professional obligation to ensure that contract data is safe and secure in enterprise hands. Security threats are found in all organizations, but it’s how you deal with those threats that matters. Contract management security is an essential part of contract management software. Since contracts are the backbone of an organization, the security of those contracts can be enhanced by applying the 5 proven best practices of contract management security listed above. Not only can you have peace of mind, but you can also avoid potential financial and legal risks.

Please keep in mind that none of the content on our blog should be considered legal advice. We understand the complexities and nuances of legal matters, and as much as we strive to ensure our information is accurate and useful, it cannot replace the personalized advice of a qualified legal professional.

Tags: #Contract Management
Date published:
Author: Portrait
Markus Presle

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