Present a reflective report on concepts of risk management and innovation.
The notion of Risk holds a universal appeal since it is omnipresent in the human paradigm. Every ambition associated with an innovative objective pertains a substantial factor of Risk. It is a sheer fault to always associate it with hazardous outcomes and equally justifiable since the possible outcomes are probabilistically uncertain. The essential objective of this essay is to conduct a comparative analysis in order to explore the dialectic relationship that underlies between Risk and Innovation while employing a reflective tone. Moreover, it caters an obligation to establish that Risk Management is an indispensable tool, which facilitates the embracement of Innovative aptitudes.
Discussion of the Elements
The concept of Risk can be summarized as an inevitable and omnipresent entity that possesses the potential to advocate a respective business concern towards innovative horizons. As per my apprehensions, I have discovered that most of the managers and business executives tend to associate the concept of risk with something hazardous and offensively designate it as a potential agent of catastrophic consequences. I wish to contradict them on the grounds of decision theory, which extensively designates risk-taking as a productive practice and consequently a potential vector of innovative ideas. Furthermore, the typical classification of Risk as threat is followed by an organizational proclivity to ignore projects of merit and excellence and simultaneously installs a mindset to avail specific projects with specific outcomes. This mindset develops a ambience of hostility for the insightful innovative ideas to flourish. In this nocturne of the essay, I wish to convey a usual definition of innovation in order to consolidate the aspect of universality associated with it.
In accordance with the introspective simulations of (Massingham, 2013), Innovation can be defined as a domestic impulse that any business unit feels in order to transcend their prevalent target market and flourish in the alternate markets. Furthermore, the economic aspect of Innovation can be derived from the simulations of (Cooper, 2014) where the author wish to illustrate it as a homogeneous superimposition of the tangible and intellectual resources of the respective unit. In an ardent organizational context, in order to attain an effective collaboration of the available resources, the respective organization need to explore the commercial opportunities that is what risks are usually characterized by.
In order to delve deep and to conduct the desired dialectic analysis, I am feeling an intense urge to introduce the discourse of Prospect Theory that underpins the potential factors and impulses and usually employed to shape the notion of Risk. It intends to propose that the level of aspiration of the strategic executives typically advocates the risk propensities of a respective unit since the level of aspiration can be posed as a systematic account that shapes the perception of the respective policymaker. Furthermore, the governing driver of this impulse can be characterized by two determining urges that every business unit typically possess and those are Critical Performance Targets (the constraints such as financial estimate) and Sustainability (Sheffi, 2014). The targets of critical performance are imposed by the prevalent performance characteristics that significantly drive the faculty of decision-making (Adner, 2016). A consistent poor performance can make the policy makers suffer stress and dilemma and usually lack interests to attend projects of merit. On the other hand, a consistent poor performance may install a complex of threat rigidity in the business executives and successive policymakers, which can be dealt with a flagrant compromise with the strategic excellence.
Risk analysis is an imperative phenomenon to conduct before paving towards innovative ideas. This can be alternatively implemented as innovative aptitude is fundamentally driven by the introspective insight procured from the systematic evaluation of the underlying risk factors and its degree of likelihood (Teece, 2016). This systematic evaluation can be presented as a prelude of the discourse of the risk management since the business executives seek prudent analytical tools to employ. Some of the reputed simulations regarding risk assessment and mitigation have extensively conveyed that the absence of relevant information is one of major issues that ask for a prudent risk management framework.
As both of the governing factors of this reflective essay are universal and omnipresent entities, I wish to reflect my simulations and consequent apprehensions from a generalized perspective in accordance with my intellectual procurement. What makes risk-taking interesting is the audacity to accept challenges simply by exercising the competent faculties of a respective organization. The notion of individual learning is the intermediate missing link, which retain the harmony among Risk and Innovative. The presence of risk encourages the respective subordinates of a unit to be involved into individual learning in order to develop the requisite competency to serve meritorious corporate causes. Furthermore, it encourages exercising the inherent communicational skills in order to overcome the intercultural hindrances that an employee is vulnerable to face while contacting with an immediate subordinate.
As per my managerial instincts, what the prevailing market is grossly devoid of is an analytical tool that can enable the respective business enterprise to comprehend the potential risks chronologically and reciprocate it with introspective simulations. In accordance with the current context, what the reputed managers and established business executives typically employ to assess risks is a tool called Enterprise Risk Management (ERM). The prevalent performance and the fascinating consistency of the analytical framework amaze me since it enables the respective unit with a broader view of prevailing risks sequentially. Moreover, the pertinent literature that serves the argumentative support of the framework is rich and able to forecast the risk propensity of the respective unit.
Recommendations and Conclusion
The trend to develop a complacency fueled by the inability to attend the tasks of excellence is condemnable and need to be considered as a potential hindrance towards alternative markets. This further comes with a possibility to stagnate the concern within their narrow domestic objectives. So, the leading business units can be recommended to develop a proclivity towards risk taking from the start-up phase. Moreover, they are expected to devise more prudent analytical frameworks of risk-assessment in order to prepare them for higher competency without losing their prevalent competitive edge.