Innovation Fueled by Risk Management

We generally do not tend to think of innovation and risk management as compatible themes. Innovation conjures up images of bold new ideas, thinking outside the box, disrupting established ways of doing things, and breaking new ground. Outdated applications of risk management, on the other hand, focused almost entirely on reducing or transferring risk, primarily by imposing controls, keeping things from getting out of hand, and inside the box. Contemporary enterprise risk management (ERM) programs, which focus not only on the identification, measurement, mitigation, monitoring and communication of risk, but also on capitalizing on risk opportunities, provides a better fit with innovation.

In truth, the two themes are not only compatible, but having an effective ERM protocol actually fuels and enables innovation. This essay makes the case for this compatibility, and offers some ideas from current ERM thinking on how to best use risk management tools to bolster innovation.

Keywords: Enterprise Risk Management