How to Mix Innovation and Risk Management

By Neil Amato

Innovation must be part of a company’s DNA if it is to survive and thrive in a fast-moving business environment. Shooting for the moon, however, takes preparation and testing, and a solid dose of risk management along the way.

Some companies are integrating innovation efforts with risk management, understanding that setting strategic objectives without thinking through the business risks could curtail such objectives. Instead of performing risk management in a vacuum, leading companies embed risk management into the innovation process, said Brian Schwartz, a PwC partner who oversees the firm’s U.S. governance, risk, and compliance enablement solutions.

Companies that have figured out this integration, according to a recent PwC survey, have higher confidence to manage new technologies such as drones, robotic process automation (RPA), or artificial intelligence. Those higher-performing companies on combined innovation risk are referred to as adapters in the PwC 2018 Risk in Review Study, released Wednesday.

Such adapters have more confidence in their ability to project revenue growth than non-adapters, Schwartz said. More companies (58%, compared with 19% of non-adapters) say risk management contributes significant value to their organization.

Read the full article on the Journal of Accountancy website.