Risk Management In Innovation

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What is the need for risk management in innovation?
According to Afuah (2003), Innovation is the use of newly acquired knowledge in developing a new product or service. Simon (2009) and Halman and Keizer (1994) mentioned in his study that risk is found in all projects but it is especially important in innovation and a high failure rate is common where 35 per cent of innovation projects fail commercially and accounting for 45 per cent of new product expenditure. According to Ozer (2006), in some industrialised countries the success rate of new products is 15 per cent and among the developing countries such as Hong Kong where it is just 2 per cent. Besides that, the authors describes that efficient innovation management should identify the unacceptable
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Besides that, the cycle of information gathering, analysis and management action is itself a form of risk management where project risk management makes this process more explicit, formalising the information collection and analysis while acknowledging that many of the data are uncertain. Furthermore, project risk management encompasses a wide range of technical, financial and market risks and also a range of potentially critical soft organisational issues as recognised in the Pentathlon model (Goffin and Pfeiffer, 1999). Therefore, the authors also mentioned that in many projects the management requirement is to understand the relative severity of the risk, compared to other projects and options available to the…show more content…
Bowers and Khorakian (2014) mentioned in their study that there are four current innovation risk management practice are:
i. Response to the integrated model – The authors mentioned that a variety of attitudes towards managing innovation risk was identifies where the combined model appears to be relevant across diverse industries which there was a clear correspondence between practice and the stage-gate innovation process model. ii. Familiarity with risk management – Bowers and Khorakian (2014) mentioned that the terms of the probabilities of events and reducing the impact of risk suggesting a greater familiarity with the basic concepts of risk management than might be expected in such of companies in Iran. Besides that, while the companies undertook various actions that are consistent with good risk management, these actions typically involved resolving specific technical problems rather that considering project risk management in a systematic

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