INNOVATION AND RISK

Why look at innovation and risk management? Innovation has become core to corporate growth and can be a significant driver of corporate value; therefore, the need for innovation is assured. Risk is assumed as a component of achieving innovation. The key is to balance them. Risk management has become a sophisticated discipline that is fundamental to company operations and a pillar of modern board responsibility. Applying the discipline and processes of a systematic risk management program to innovation results in a partnership that allows companies to embrace greater innovation while staying within their risk profile.

Importance of innovation to corporations

Innovation has become core to corporate growth as both an offensive and defensive strategy. On the positive side, Forbes has created the Innovation Premium to measure how much investors bid up a stock price above the value of its existing business based on expectation of future innovative results from new products services and markets; this premium ranges from a high of 72.8 percent for Salesforce.com to 18.6 percent for Daikin Industries. On the downside, providing the same product or service leaves an organisation vulnerable to disruptive innovation as industries evolve, new

competition arrives and technology revolutionises the way things are done. Innovation is associated with Silicon Valley but in reality impacts everything from consumer products to pharmaceuticals to digital services.

Apr-Jun 2014 Issue

VIAD