--- name: deal-risk-identifier description: "Converts due diligence findings and data room documents into a structured risk register covering financial, operational, legal, regulatory, people, cyber, and ESG risks — each scored by severity and likelihood, ranked, and paired with recommended mitigants and deal-structure implications. Use when reviewing diligence findings, working through a data room, or building a risk register for an acquisition, investment, or merger." argument-hint: "[diligence-findings] [deal-type]" allowed-tools: ["Read"] --- # Deal Risk Identifier ## Purpose Transform a pile of diligence findings or data room documents into a prioritized, defensible risk register — every material risk surfaced, categorized across seven domains, scored on severity and likelihood, and matched to a concrete mitigant or deal-structure lever. Replaces ad hoc, memory-driven risk-spotting with a systematic sweep that survives investment committee scrutiny. ## When to Use Invoke this skill when the user asks to: - Review due diligence findings and surface deal risks - Build or populate a risk register for an acquisition, investment, or merger - Assess what could derail a deal before signing or close - Categorize and prioritize findings from a data room - Flag issues that should affect purchase price, indemnities, or escrow - Prepare a risk summary for an investment committee or deal team memo ## Inputs Required Before starting, collect: - **Deal type**: Acquisition / minority investment / merger / carve-out / LBO - **Target overview**: What the business does, sector, geography, approximate revenue or EV - **Diligence findings provided**: The documents, summaries, or workstream notes to analyze (financial QoE, legal, tax, commercial, IT, HR, etc.) - **Deal stage**: Pre-LOI / post-LOI confirmatory / pre-signing / pre-close - **Materiality threshold**: Dollar or % threshold below which a risk is not worth registering (default: 1% of EV or $250K, whichever is lower) - **Known deal-breakers**: Any issues already flagged as red lines by the deal team - **Structure flexibility**: Can price, escrow, indemnities, or earnouts still be negotiated? If materiality threshold or structure flexibility is missing, assume a confirmatory-stage deal with negotiable terms and note the assumption. ## Instructions ### Step 1: Sweep Findings Across Seven Risk Domains Read every finding provided and assign it to one or more domains. Do not skip a domain because nothing was flagged — explicitly note when a domain appears clean or under-covered, since gaps in diligence are themselves risks. - **Financial**: Revenue quality, customer concentration, margin sustainability, working capital normalization, off-balance-sheet items, accounting policy aggressiveness, debt and contingent liabilities, QoE adjustments - **Operational**: Key-person dependency in operations, supplier/vendor concentration, capacity constraints, integration complexity, IT systems debt, undocumented processes, churn drivers - **Legal**: Litigation (active and threatened), contract assignability/change-of-control clauses, IP ownership and licensing, warranty exposure, undisclosed liabilities, title/asset ownership - **Regulatory**: Licenses and permits, antitrust/merger control, sector-specific compliance, sanctions/export controls, pending regulatory change, history of violations - **People**: Management retention, equity/comp obligations triggered by the deal, union/labor matters, culture and attrition, succession gaps, employment misclassification - **Cyber**: Breach history, security posture, data inventory and privacy compliance (GDPR/CCPA), third-party/vendor security exposure, ransomware readiness - **ESG**: Environmental liabilities and remediation, governance red flags, supply-chain labor risk, climate transition exposure, reputational issues ### Step 2: Score Each Risk on Severity and Likelihood For every registered risk, assign two ratings: - **Severity (1–5)**: Financial and strategic impact if the risk materializes. 5 = deal-breaking or >10% of EV; 4 = material price/structure impact; 3 = manageable but real cost; 2 = minor; 1 = noise. Apply the materiality threshold — drop anything below it. - **Likelihood (1–5)**: Probability the risk actually materializes given the evidence. 5 = already occurring or near-certain; 3 = plausible; 1 = remote. Compute a **Risk Score = Severity × Likelihood** (range 1–25). Flag any risk with Severity 5 as a potential deal-breaker regardless of likelihood. ### Step 3: Assign a Confidence Level to Each Assessment Mark how well-evidenced each risk is: - **High**: Directly documented in diligence materials - **Medium**: Inferred from partial evidence or industry pattern - **Low**: Suspected but diligence is incomplete — recommend a specific follow-up request Low-confidence high-severity items become **open diligence requests**, not just register entries. ### Step 4: Recommend a Mitigant for Each Risk Match each risk to the most appropriate lever. Be specific — name the mechanism, not "address this": - **Price**: Purchase price reduction or QoE adjustment with rough quantum - **Structure**: Escrow, holdback, earnout, deferred consideration - **Contract**: Specific indemnity, R&W, covenant, condition to close, or pre-close remediation - **Insurance**: R&W insurance, specific contingent risk policy - **Post-close**: Integration action, retention package, remediation plan with owner and timeline - **Walk**: For unmitigable Severity-5 risks, state it plainly ### Step 5: Rank and Synthesize Order the register by Risk Score descending. Then write a short synthesis: the 3–5 risks that should drive deal decisions, any clustering that signals a systemic problem, and an overall posture recommendation (proceed / proceed with conditions / renegotiate / walk). ## Output Format - **Structure**: A risk register table followed by an open-items list and a written synthesis - **Length**: 900–1,400 words depending on finding volume - **Format**: Risk register as a table (columns: ID, Domain, Risk Description, Severity, Likelihood, Risk Score, Confidence, Recommended Mitigant); open diligence requests as a numbered list; synthesis as prose - **Sections**: Risk Register (table, ranked by score) → Potential Deal-Breakers (called out separately) → Open Diligence Requests → Synthesis & Posture Recommendation - **Tone**: Deal-team principal — precise, evidence-anchored, willing to state a deal-breaker without hedging ## Quality Checklist Before delivering output, verify: - [ ] All seven risk domains are addressed — each either populated or explicitly noted as clean/under-covered - [ ] Every register entry has a Severity, Likelihood, computed Risk Score, and Confidence level - [ ] The register is sorted by Risk Score in descending order - [ ] Every risk has a specific named mitigant — no entry says only "monitor" or "address" - [ ] All Severity-5 items appear in the Potential Deal-Breakers section - [ ] Low-confidence high-severity risks are converted into specific open diligence requests - [ ] The synthesis names a clear posture recommendation rather than hedging ## Notes - Gaps in diligence are risks — a domain with no findings often means it wasn't examined, not that it's clean. Flag thin coverage explicitly. - Risk clustering matters more than any single entry: three medium financial findings plus an aggressive accounting policy often signal a systemic quality-of-earnings problem worth a hard price conversation. - Tie quantum to mitigants wherever the findings allow — "$2M escrow against the disputed tax position" is actionable; "indemnification" is not. - At pre-LOI stage, weight the register toward what to confirm; at pre-close, weight it toward what must be papered before signing. --- ## How to use this skill This file is a Claude Code skill in [Anthropic's standard format](https://docs.anthropic.com/en/docs/claude-code/skills) — markdown with YAML frontmatter at the top. **Installing in Claude Code:** - `~/.claude/skills//SKILL.md` — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects) - `/.claude/skills//SKILL.md` — auto-loads only when working in that project (recommended for project-specific skills) Restart Claude Code or open a new session to register. **Using in Claude.ai, ChatGPT, Gemini, or other AI tools:** 1. 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