How does risk management help with innovation?
To understand the relationship, study the pictures below and answer the questions that follow:
Picture 1: T Model risks
Name the four risks present in the T-model above?
What risks do you see?
Of course, you may have noted weak frame, the car cannot run fast as it could skid, passengers are not safe due to weather vagaries, and poor navigation, etc. Taken together, those risks make it risky to move in the car. Something must be done. And that is where innovation comes about.
Now study the next car:
Picture 2: New car model
What key innovations or improvements have occurred?
What risks still exist?
In what ways is running a business be like driving a car from a risk perspective?
As you can see, the new car model has addressed most of the risks that were present in the T-model. That is what innovation is all about.
Even then, more risks still exist. And for that reason, innovations must be explored to address the risks.
Therefore, innovation is the process of addressing new and emerging risks in the business. Whenever there is a risk, there is an opportunity to address the risk.
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