As new risks emerge and develop at surprising speeds, it is up to risk managers to keep up with these risks that may end up as major threats to their organisations. To achieve this, risk managers must be able to guide their organizations in strategic innovation.
Earlier this year, a report by international risk management association RIMS, titled ‘Innovation and Strategic Risk Management’, looked at various approaches and techniques for productively managing uncertainty when innovating.
Monica Merrifield (pictured), chair of RIMS’ Strategic & Enterprise Risk Council and the report’s author, spoke with Corporate Risk and Insurance on the importance of innovation in the risk management field.
According to Merrifield, the challenges that risk practitioners are going to face when innovating are similar to what most organizations wrestle with. First of these is the challenge of how to define innovation.
“You can ask a dozen people to define innovation and you’re probably going to hear 12 different answers,” she said.
Put simply, Merrifield defined innovation as implementing something new or different to create value. Value, on the other hand, encompasses a wide range of gains for an organization. It may be a new revenue stream, or growing impact and reach in markets or communities served, or a new lesson that informs the next round of innovation efforts.
“Another common challenge that risk practitioners and organizations will have to deal with is the fear of failure,” she said. “If we look at lessons learned as an investment that can fuel the next iteration and landing a great idea, then that’s an incredible investment.”
Merrifield mentioned that the most innovative organizations share a few common traits, one of which is having a common understanding of innovation internally. Furthermore, for innovation to happen more intentionally, she said there must be a strong commitment at the top that translates into providing the necessary resources – such as time, people, tools, and space – to continuously innovate.