By Daniel Hunter
Innovation and risk management are now seen as two sides of the same coin by business leaders seeking to grow their companies. According to a new report released today, company leaders are challenging the perception that managing risk stifles growth and instead making it part of their growth and innovation strategies.
The Risky Business Report by Allianz identifies a new growth approach where business leaders weigh up both challenges and opportunities at every turn of their decision making to help drive success. It is increasingly seen as a risk to businesses NOT to innovate.
These businesses are applying risk principles to innovation, ensuring they understand the risk of not entering new markets or developing new products as well as the opportunities they may present, according to the report. It finds businesses are increasingly using risk management as an enabler to tackle challenges upfront and deliver growth through new ideas, expansion and originality.
Business leaders are taking an action oriented approach to overcome the risks their businesses may experience according to research commissioned for the report. For example, implementing a growth strategy is top of the action list with almost one in three (30%) having a plan to deliver growth during 2013. In addition when asked about their management priorities for 2013 innovation made it into the top three:
1. Training and development (24%)
2. Recruitment (23%)
3. Innovation and R&D (21%)
“Ambitious businesses going for growth do not see risk management as a barrier," Allianz Insurance CEO, Andrew Torrance said.
"Companies who can utilise both risk management and innovation in parallel, will find sustainable ways to deliver growth and embrace change and innovative approaches throughout their organisations.”
The report finds company heads are changing the role of risk management, bringing it into the boardroom to support the drive for new ideas and strategies for growth. But 43% are extending the principle even further and engaging wider teams to identify and plan for potential risks when they are looking at new developments such as product launches and expanding internationally.
According to Allianz, this evolution will help business leaders to plan effectively for risks while they are focused on delivering growth and not just react post-event after the damage has been done — as 96% of business leaders admitted they have done at some point.
The distinction between a risk and a challenge is shifting in the minds of business leaders demonstrating the strategic mindshift. They now view customer satisfaction, strategy and reputation as challenges for their business to overcome, not risks. The Risky Business Report shows the top business risks identified by business leaders are data security, credit risk and internal fraud, demonstrating how changes in the wider environment are impacting business concerns.
Top Risks Feared By Businesses Top Challenges Faced By Businesses
1. Data security 1. Customer satisfaction
2. Credit risk 2. Developing and delivering a strategy
3. Internal fraud 3. Reputation
4. Liquidity 4. Skills & competence
5. Customer satisfaction 5. Developing a specialism as a route to
“Our report shows that businesses are increasingly considering the challenges and risks they face as an integral part of their planning. It however brings to the fore an understanding that arguably the biggest risk to a company’s future is a lack of innovation, and that businesses should not see risk as a barrier to being innovative," Andrew Torrance said.
"At Allianz we’ve implemented over 38,000 ideas submitted by our employees. These ideas were generated as part of a strategy to encourage employees to be open and share their ideas for improving the business. This, in turn, keeps us open to new ideas and ways of working, and thereby ensures we don’t stand still as a business.”
“Every type and size of business is open to a variety of risks and challenges that can be overcome through identification, planning and taking the advice of outside experts when needed. In some businesses the specific task of looking at the risks faced are not the responsibility of a particular employee, but a shared responsibility which is encouraging. We hope that the take away for businesses from the Risky Business Report is that by openly acknowledging and managing risk they can have an even brighter future — especially when it is used as an aid and not a hindrance to innovation.”
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