INNOVATION vs. RISK MANAGEMENT
SAI KRISHNA PRASAD RAO JOGINIPALLY
Innovation vs. Risk Management- Which should take the priority
The term risk management refers to the continuous process of identifying, assessing or analyzing, minimizing exposure to the effects of uncertainty on the objectives. Objective in our case is innovation, which can be defined as designing better solutions to meet new challenges or requirements; innovation is also means for economic growth (Vargas Hernández, 2015). To an innovator, the risk assessor may look more like a policeman who tends to overlook the risks involved in the innovation, these could arise from the losses or liabilities related to intellectual properties, shifting market requirement, raw material availability, regulations and other related financial risk.
It’s often seen that the risk management is a necessary checkpoint for a company but at the same time it also can act as uber guardian averse to any risk, which at times can stifle the innovation. Hence this question is necessary to answer whether risk management should take priority over the innovation or vice versa.
Innovation is necessary for development of any society or generation. We are progressive animals. Need is mother of invention and to find proper solution to the problem requires exploring various possibilities from technical, social, economic angles. However question one need to ask is whether innovation is all good or is there a negative side of the innovation also.
In reference to topic of my discussion, I would propose that risk management should take priority over the innovation. To illustrate my point, I would like to pose a hypothetical question, is innovation always good or it has its negative sides as well. Let’s take an example of innovation of nanotechnology. Today the innovation of nanotechnology has created new dimensions in the particle size which can be used in the drug delivery and creating the solution for deadly disease like cancer, however there is also a negative side to it, which we may not understood properly, related to its effect on the human as well its surrounding environment, what happens if the nanoparticles reach beyond the target organs and accumulate in the body or environment and posing a health hazard. Thus the risk factors of innovation need to be identified and assessed for even the lifesaving innovations. In fact it may not be wrong to say that innovation both creates and destroys however if proper risk management is in place it helps to reduce the destructive ability of the innovation or a technology. Decision not to proceed in an innovation because of the possible risk involved will only stifle the innovation. However with proper risk assessment and management can help the management to take prudent risk. For any new innovation or technology there is always unpredictability associated with its regulatory nature or market acceptability or barrier to entry. Risk assessment and management is of great importance for responsible innovation. Innovation is not mere an invention, but in fact Innovation starts in lab and ends in the clinic or environment and hence the broad risk assessment and its management is important. Risk assessment and management is not detrimental to the innovation but in fact can propel it in right direction, to illustrate this fact let’s take another example of risk management of innovation. BPA is a chemical (Bisphenol) which is used now to make protective coating and lining for food and drink containers. It was later realized that minute quantity of the bisphenol also can transfer from the container into the food products or beverages. The hazard attached with this is health related, as Bisphenol can affect the hormonal systems and may cause endocrine disruption. In this example the risk assessment can help to understand whether this exposure to BPA can cause any potential risk to...
References: Keizer, J. A., Halman, J. I. M., & Song, M. (2001). From Experience: applying the risk diagnosing methodology. Journal of product innovation management, 19, 213-232.
Royalsociety.org,. (2009). Reaping the benefits: Science and the sustainable intensification of global agriculture | Royal Society. Retrieved 20 March 2015, from https://royalsociety.org/policy/%20publications/2009/reaping-benefits/
Vargas HernÃ¡ndez, J. (2015). Risk or Innovation, Which One Is Far more Preferable in Innovation Projects?. Ccsenet.org. Retrieved 20 March 2015, from http://www.ccsenet.org/journal/index.php/ijms/article/viewFile/5994/4808
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