“One sentence in a contract can cost you far more than you ever expected.”

Kong Aik Lee, Covarage

Thank you for taking the time to speak with us. Covarage is an insurance management platform primarily built to help small businesses understand and manage their risks.

Today, however, we're not just talking about insurance. We want to talk about your journey as a founder and business operator: the risks you've encountered, the lessons you've learned, and the emerging risks you think business owners should be paying attention to.

The idea behind Emerging Risks 2027 is simple. Imagine someone who is 21, 25, 28 or even 34 years old starting their first business. What can they learn from experienced operators so they don't have to make all the same expensive mistakes themselves?

Let's start with you. Tell us about your business and what you're building.

Nelson Lee

I'm the founder and creator of Charlie AI, or Charlie Legal, an AI platform accessible to professionals and businesses looking for reliable, grounded legal information.

We're building on top of the major LLMs available today, including Gemini, OpenAI and Claude. What we want to provide is a platform that is concise, accurate and grounded in Singapore law.

The major LLM platforms are incredibly capable, but they aren't specifically designed for Singapore legal information. There can still be limitations and inaccuracies in their outputs.

When you're dealing with legal matters, even a small percentage of inaccuracy can become very costly. That one or two percent could potentially contribute to a dispute or litigation that costs a business a significant amount of money.

What we're trying to do is make reliable legal information more accessible and affordable. We've priced Charlie at around $20 per month so that individuals and businesses can have access to legal information without necessarily facing the traditional cost barriers.

For example, a business owner might have an issue involving an employee, while an employee might have an issue involving their employer. We want Charlie to make legal information accessible across that spectrum.

Kong

The purpose of Emerging Risks 2027 is to learn from experienced business owners and share those lessons with people who may be starting their first company.

Looking back at your career, what's one business risk or mistake that proved particularly costly?

Nelson

Contracts.

And I say that from experience, costly experience.

Today, you can very easily use an AI platform to generate a contract that might look 90% or even 98% correct. Because it looks professional and comprehensive, you might assume that it's foolproof.

But that remaining one or two percent can matter enormously.

Take something as seemingly straightforward as an employment contract. You're hiring someone, so you ask an AI to draft the employment agreement. You receive something that looks good, you don't check it carefully, you don't look for red flags and you don't seek additional information or professional input.

You give the contract to the employee.

Everything seems fine until something goes wrong.

When a dispute happens and you finally have to rely on that contract, you may discover weaknesses you hadn't considered when you signed it.

That's a major risk I see with contracts generally, not just employment contracts. I've personally learned that lesson through costly experience.

Kong

For someone starting their first business, it can be difficult to visualize what that risk actually looks like.

Could you give us an example of how a seemingly small contractual issue can become a real business problem?

Nelson

Start with two founders.

You and a co-founder decide, "Let's start a company."

You incorporate the business and get started. But perhaps neither of you realizes that you should consider putting a shareholders' agreement in place to govern the relationship between the founders.

At the beginning, everything is going well, so it doesn't seem important.

But later, circumstances change. Maybe the business raises funding. Maybe the relationship between the founders deteriorates. Maybe one person wants to leave.

Suddenly, the things that weren't clearly agreed upon at the beginning become very important.

That's a risk from day one.

One of the biggest problems in business is simply not knowing what you don't know. That's why getting access to proper information and advice when necessary is so important.

Kong

If those founders don't have a shareholders' agreement and their relationship breaks down, what are they actually exposed to?

Nelson

A dispute.

And if the dispute can't be settled between the parties, it can potentially escalate into formal legal proceedings.

That means money, but it also means time.

For a founder, time is incredibly important. You want to be focused on building the business, developing the product, serving customers and growing the company.

The last thing you want is to spend your time dealing with a dispute with your co-founder.

That's why founders need access to good legal information and, where appropriate, professional legal advice. You want to identify these issues before they become disputes rather than after.

Kong

You mentioned earlier that some of this comes from personal experience. Is there a particular contractual mistake that stayed with you?

Nelson

Yes. Jurisdiction.

There was a contract where I didn't properly notice that the jurisdiction governing the agreement was the UK.

At the time, you look at the agreement and think everything is fine. You're operating in Singapore, the money is being transferred in Singapore, and you assume you're protected.

But legally, the situation can be more complicated than that.

That one clause became extremely important.

It turned into something that affected me for around three years.

That's the lesson: sometimes it's just one clause. One sentence in a contract can cost you far more than you ever expected.

Kong

And that's interesting because the contract doesn't necessarily look obviously dangerous when you sign it.

Nelson

Exactly.

I've had another contractual situation more recently where the other side argued that an agreement wasn't valid because it had been drafted by a layperson.

But the underlying activities contemplated by the agreement had actually taken place. Money had been transferred and shares had been transferred.

That experience also made me reflect on the contract itself.

Even where you believe the agreement is valid, you can look back and realize there were things that could have been drafted more clearly or more robustly.

That particular contract had originally been created using AI.

That's the reality.

AI is extremely useful, but you shouldn't gamble with important contracts. One sentence can potentially cost you a lot of money.

Use AI as a tool, but understand the limits of what you're relying on and get appropriate professional input when the stakes justify it.

Kong

That leads nicely into the broader theme of this study: emerging risks.

Looking toward 2027, businesses are operating in an environment shaped by geopolitical tensions, inflation, rapid technological change, cybersecurity threats and increasingly interconnected supply chains.

As a business owner, what emerging risks concern you today, and what do you think businesses should be preparing for?

Nelson

One of the major risks I see is business liability arising from circumstances that companies may not be able to control.

The environment businesses operate in today is different from even a year or two ago. We have wars and geopolitical instability happening around the world, and those events can affect businesses very quickly.

You might find yourself unable to fulfil an obligation because something outside your control has happened.

But the fact that the cause was outside your control doesn't necessarily mean the commercial consequences disappear.

Businesses therefore need to think seriously about their contractual obligations, liability exposure and how they're protecting themselves.

For me, understanding and protecting a business against liability is becoming increasingly important as we head toward 2027.

Kong

Before we finish, I'm going to turn the interview around slightly.

I'm planning to speak with more experienced founders and operators as part of this study. What should I be asking them? What would you personally want to learn from other business owners?

Nelson

Ask them what they've learned from and what has cost them money.

That's where the best lessons are.

Ask about the contract they signed without looking closely enough. Ask about the clause they thought was insignificant that ended up costing them.

Those are the experiences that actually teach you something.

For me, it was realizing how much one clause or even one sentence could matter.

That's what I would tell another business owner: don't gamble with your contracts.

Do them properly.

Because fixing the problem at the beginning can be far cheaper than discovering the problem years later.