Innovation Risk Management

It’s easy as a PM to only focus on the upside. But you'll notice: more experienced PMs actually spend more time on the downside. The reason is simple: the more time you’ve spent in Product Management, the more times you’ve been burned. The team releases “the” feature that was supposed to change everything for the product - and everything remains the same. When you reach this stage, product management becomes less about figuring out what new feature could deliver great value, and more about de-risking the choices you have made to deliver the needed impact. -- To do this systematically, I recommend considering Marty Cagan's classical 4 Risks. 𝟭. 𝗩𝗮𝗹𝘂𝗲 𝗥𝗶𝘀𝗸: 𝗧𝗵𝗲 𝗦𝗼𝘂𝗹 𝗼𝗳 𝘁𝗵𝗲 𝗣𝗿𝗼𝗱𝘂𝗰𝘁 Remember Juicero? They built a $400 Wi-Fi-enabled juicer, only to discover that their value proposition wasn’t compelling. Customers could just as easily squeeze the juice packs with their hands. A hard lesson in value risk. Value Risk asks whether customers care enough to open their wallets or devote their time. It’s the soul of your product. If you can’t be match how much they value their money or time, you’re toast. 𝟮. 𝗨𝘀𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗥𝗶𝘀𝗸: 𝗧𝗵𝗲 𝗨𝘀𝗲𝗿’𝘀 𝗟𝗲𝗻𝘀 Usability Risk isn't about if customers find value; it's about whether they can even get to that value. Can they navigate your product without wanting to throw their device out the window? Google Glass failed not because of value but usability. People didn’t want to wear something perceived as geeky, or that invaded privacy. Google Glass was a usability nightmare that never got its day in the sun. 𝟯. 𝗙𝗲𝗮𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗥𝗶𝘀𝗸: 𝗧𝗵𝗲 𝗔𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗣𝗼𝘀𝘀𝗶𝗯𝗹𝗲 Feasibility Risk takes a different angle. It's not about the market or the user; it's about you. Can you and your team actually build what you’ve dreamed up? Theranos promised the moon but couldn't deliver. It claimed its technology could run extensive tests with a single drop of blood. The reality? It was scientifically impossible with their tech. They ignored feasibility risk and paid the price. 𝟰. 𝗩𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗥𝗶𝘀𝗸: 𝗧𝗵𝗲 𝗠𝘂𝗹𝘁𝗶-𝗗𝗶𝗺𝗲𝗻𝘀𝗶𝗼𝗻𝗮𝗹 𝗖𝗵𝗲𝘀𝘀 𝗚𝗮𝗺𝗲 (Business) Viability Risk is the "grandmaster" of risks. It asks: Does this product make sense within the broader context of your business? Take Kodak for example. They actually invented the digital camera but failed to adapt their business model to this disruptive technology. They held back due to fear it would cannibalize their film business. -- This systematic approach is the best way I have found to help de-risk big launches. How do you like to de-risk?

"This white paper offers a comprehensive overview of how to responsibly govern AI systems, with particular emphasis on compliance with the EU Artificial Intelligence Act (AI Act), the world’s first comprehensive legal framework for AI. It also outlines the evolving risk landscape that organizations must navigate as they scale their use of AI. These risks include: ▪ Ethical, social, and environmental risks – such as algorithmic bias, lack of transparency, insufficient human oversight, and the growing environmental footprint of generative AI systems. ▪ Operational risks – including unpredictable model behavior, hallucinations, data quality issues, and ineffective integration into business processes. ▪ Reputational risks – resulting from stakeholder distrust due to errors, discrimination, or mismanaged AI deployment. ▪ Security and privacy risks – encompassing cyber threats, data breaches, and unintended information disclosure. To mitigate these risks and ensure AI is used responsibly, in this white paper we propose a set of governance recommendations, including: ▪ Ensuring transparency through clear communication about AI systems’ purpose, capabilities, and limitations. ▪ Promoting AI literacy via targeted training and well-defined responsibilities across functions. ▪ Strengthening security and resilience by implementing monitoring processes, incident response protocols, and robust technical safeguards. ▪ Maintaining meaningful human oversight, particularly for high-impact decisions. ▪ Appointing an AI Champion to lead responsible deployment, oversee risk assessments, and foster a safe environment for experimentation. Lastly, this white paper acknowledges the key implementation challenges facing organizations: overcoming internal resistance, balancing innovation with regulatory compliance, managing technical complexity (such as explainability and auditability), and navigating a rapidly evolving and often fragmented regulatory landscape" Agata Szeliga, Anna Tujakowska, and Sylwia Macura-Targosz Sołtysiński Kawecki & Szlęzak

🔍 What Is a Risk Assessment Methodology? A risk assessment methodology is the structured approach an organization uses to identify, analyze, evaluate, and prioritize risks. It ensures consistent, repeatable assessments across all business areas and is essential for risk-informed decision-making. ⸻ ✅ Core Components of a Risk Assessment Methodology: 1. Risk Identification • Pinpoint what could go wrong (risk events). • Sources: business processes, historical incidents, regulatory changes, third-party risks, IT systems, etc. • Tools: brainstorming, risk checklists, process walkthroughs, SWOT, interviews, PESTLE. 2. Risk Analysis • Determine the likelihood and impact of each risk. • Approaches: • Qualitative (e.g., High/Medium/Low or Heat Maps) • Semi-quantitative (e.g., scoring systems 1–5 for likelihood and impact) • Quantitative (e.g., Monte Carlo, VaR, financial modeling) 3. Risk Evaluation • Compare risk levels to your risk appetite and tolerance thresholds. • Decide which risks are acceptable, and which need treatment or escalation. 4. Risk Prioritization • Rank risks based on their score to allocate resources effectively. • Often visualized in a risk matrix or heat map. 5. Risk Treatment (Optional in Assessment Phase) • Recommend how to handle critical risks: • Avoid • Transfer • Mitigate (via controls) • Accept 📊 Common Methodologies Used: 1️⃣ISO 31000 Framework Emphasizes integration, structure, and continuous improvement in risk management. 2️⃣ COSO ERM Framework Aligns risk with strategy and performance across governance, culture, and objective-setting. 3️⃣ Basel II/III for Financial Risk Used in banking and finance, focusing on credit, market, and operational risk. 4️⃣ NIST Risk Assessment Applied in cybersecurity and federal agencies, emphasizing threats, vulnerabilities, and impacts. 🎯 Best Practices: • Use both inherent and residual risk ratings. • Involve first-line teams for accurate process-level risk input. • Align methodology with risk appetite and strategic objectives. • Document risk criteria (likelihood/impact definitions) clearly. • Update the risk assessment periodically or after significant events.

Using foresight to anticipate emerging critical risk - a Proposed methodology by OECD - OCDE The new OECD paper presents a methodology to help countries identify and characterise global emerging critical risks as part of the OECD’s Framework on the Management of Emerging Critical Risks. It supports experts and policymakers tasked with anticipating and preparing for uncertain and evolving threats that transcend traditional national boundaries. 1️⃣ The approach begins with horizon scanning to capture weak signals and unconventional data sources, including patent analysis, crowd forecasting, and the use of generative AI. 2️⃣It then applies structured foresight techniques, such as futures wheels, cross-impact analysis, and scenario-based “Risk-Worlds,” to explore how risks might manifest and interact in multiple possible future contexts. The methodology emphasises understanding risks “at source,” focusing on vulnerabilities, interconnectedness, and possible management strategies. Rather than predicting a single future, it seeks to broaden the range of possibilities, encouraging proactive adaptation, building collective understanding, and ultimately strengthening government capacity to navigate and shape an increasingly complex and uncertain global risk landscape. Kudos to Josh Polchar and OECD for putting the paper out #Foresight #Futures #Scenarios #OECD #Methodology

From data privacy challenges and model hallucinations to adversarial threats, the landscape around Gen AI security is growing more complex every day.    The latest in Deloitte’s “Engineering in the Age of Generative AI” series (https://deloi.tt/41AMMif) outlines four key risk areas affecting cyber leaders: enterprise risks, gen AI capability risks, adversarial AI threats, and marketplace challenges like shifting regulations and infrastructure strain.    Managing these risks isn’t just about protecting today’s operations but preparing for what’s next. Leaders should focus on recalibrating cybersecurity strategies, enhancing data provenance, and adopting AI-specific defenses.   While there’s no one-size-fits-all solution, aligning cyber investments with emerging risks will help organizations safeguard their Gen AI strategies — today and well into the future. 

The growing complexity of supply chain interdependencies is creating significant cybersecurity risks. In my latest article for the World Economic Forum’s Centre for Cybersecurity, I outline five key risk factors and what organisations must do to mitigate them: 1️⃣ Cyber Inequity – Large organisations are improving cyber resilience, but SMEs remain vulnerable. They must view cybersecurity as a business priority, while industry collaboration and policy support can help bridge the gap. 2️⃣ Limited Supply Chain Visibility – Expanding supply chains make it harder to assess supplier security. Without clear incentives, compliance gaps persist, increasing exposure to cyber threats. 3️⃣ Third-Party Software Vulnerabilities – AI and open-source adoption introduce new risks, yet only 37% of organisations assess AI tool security before deployment. A structured security framework is essential. 4️⃣ Dependence on Critical Providers – Over-reliance on a few key suppliers creates systemic points of failure. Resilient IT architectures and strong business continuity planning are critical. 5️⃣ Geopolitical Risks – Cyber threats are increasingly shaped by global tensions, disrupting supply chains and increasing attack sophistication. Organisations must integrate geopolitical risk assessments into their cybersecurity strategies. 𝗪𝗵𝗮𝘁’𝘀 𝗡𝗲𝘅𝘁? Organisations must prioritize visibility, support smaller partners, and invest in resilience. Strong business continuity planning, robust IT management, and proactive threat detection are non-negotiable. Cybersecurity is not just an IT issue—it’s a strategic imperative. Read the full article here: https://lnkd.in/g-yQ2QRa #CyberSecurity #SupplyChain #AI #RiskManagement

Letter R: Risk (Assessment, Management, and Mitigation): A Continuous Guardian Our ‘A to Z of Cybersecurity’ tackles Risk Management - the ongoing process of identifying, evaluating, and mitigating potential threats to your organization. It's like having a security guard who never sleeps! Effective risk management isn't a one-time event; it's a continuous cycle: Identifying the Threats: · Threat Landscape Analysis: Understanding the evolving threats in your industry and the broader cybersecurity landscape. · Vulnerability Assessments: Regularly scanning your systems and processes to identify potential weaknesses. · Asset Inventory: Knowing what data and systems you have is crucial for assessing risk. Taking Action: · Risk Mitigation Strategies: Implement controls to reduce the likelihood or impact of a risk. This could involve technical solutions, policy changes, or user awareness training. · Risk Transfer: In some cases, transferring risk through insurance might be appropriate. · Risk Acceptance: For certain low-impact risks, accepting the risk might be the most cost-effective solution. The Continuous Loop: · Regular Reviews: The risk landscape is constantly evolving, so ongoing assessments and adjustments are crucial. · Lessons Learned: Analyze past incidents to improve your risk management practices. · Communication & Awareness: Keep stakeholders informed about identified risks and implemented mitigation strategies. Effective risk management is the cornerstone of a secure organization. By proactively identifying and mitigating threats, you can build a resilient digital fortress. #Cybersecurity #RiskManagement

Hydrogen Production Plants Safety Studies: HAZID, HAZOP, QRA, LOPA, SIL and FEME 🟦 1) Green hydrogen production is set to increase rapidly, posing a significant challenge for the industry. Large-scale industrial water electrolysis plants use hydrogen and oxygen within the same equipment, separated by a membrane or diaphragm. Ensuring process safety is essential. In this post, I've summarized the safety study required for your green hydrogen project. 🟦 2) HAZID HAZID (Hazard Identification study) is a qualitative technique for identifying a process's main hazards. It involves using a block diagram or process flow diagram (PFD), which is used in the early stages of the design process. 🟦 3) HAZOP HAZOP (Hazard & Operability analysis) is a method to identify process hazards by analyzing deviations from normal conditions at the P&ID level. It focuses on equipment function loss and human error. Key elements of HAZOP sessions are: - Deviation - Cause of the deviation - Consequence of the deviation - Installed safeguards 🟦 4) Bow tie The bow tie method visually presents hazard scenarios, including the chain of events and barriers to prevent or mitigate scenarios. It is useful for internal and external communication of scenarios. 🟦 5) Risk matrix A risk matrix is used to assess the tolerability of a scenario based on the frequency and severity of undesired events. Likelihood is measured in frequencies per year, while consequences are defined by HSE impact and economic losses. The risk matrix determines the risk level. 🟦 6) Quantitative Risk Analysis (QRA)  QRA is a method for calculating safety contours by considering the combination of fatalities and frequency. It involves determining the frequency of fatalities using tools like Fault Tree Analysis (FTA) and Event Tree Analysis (ETA). The consequence itself is determined using other tools, and all barriers that have an effect reduce the evaluated risk. 🟦 7) Level of Protection Analysis (LOPA) A small team further analyzes a subset of the most hazardous scenarios identified during a HAZOP, assessing the frequency and severity of the consequence. The basic principle of LOPA is that every safeguard may fail, so the consequence of the non-protected scenario cannot be eliminated. 🟦 8) Safety Integrity Level (SIL) SIL assessments are used to assign risk deduction factors to instrumental safeguards. The requirements for safety instrumented systems are given in IEC61508 and 61511. Four SIL levels are specified, with SIL 4 having a risk deduction factor of 10,000 to 100,000 and SIL 1 having a factor of 10 to 100. 🟦 9) Failure Mode and Effect Analysis (FMEA) FMEA focuses on equipment part failure and frequency to determine maintenance strategies. The accuracy of risk assessment depends on data quality. Source: See attached image. This post is based on my knowledge and is for educational purposes only.  👇 What other hydrogen safety study do you conduct? #hydrogen #Process #Safety

Here’s a new, highly-timely way to classify innovations: FLEXIBLE vs. INFLEXIBLE. When chaos abounds, prioritize the FLEXIBLE. Yet companies usually spend most money and time on what’s INFLEXIBLE. Six ways to change the balance are: 1️⃣ Map your innovation portfolio How have you spread your bets along axes such as time horizon, type of risk taken, and ability to change course? Know where your portfolio is currently at, and what profile you wish to move toward. 2️⃣ Create options What are inexpensive bets you can place on ways your world might shift? Consider, for instance, low-cost products that might be embraced by customers feeling acute economic pressures. Perhaps these bets have a relatively large probability of not paying off – that’s OK if they’re taken inexpensively, keeping your financial risk small. 3️⃣ Think platforms, not products Platforms create flexibility to change what you offer customers, while retaining a sticky customer relationship. They often have a software component, even in the world of physical goods. 4️⃣ Stay focused on your customers’ constants We can be certain that today’s chaotic environment won’t settle down soon. But your customers’ Jobs to be Done stay fairly constant. Know those very well and concentrate on them. 5️⃣ Prioritize business model and service innovations Product innovation often takes time and multi-year planning. Business model and service innovations are much more flexible (and cheaper), yet oftentimes companies lack clear mechanisms to pursue these. Fix that. 6️⃣ Pursue Costovation You can concentrate some of the less flexible portions of your portfolio on cost innovation (Costovation), because your costs are often more controllable than your revenues. Use the tools of innovation to radically re-think your costs. The innovation literature has many classifications: disruptive vs. sustaining, existing vs. new market, etc. But it’s been rare to classify flexible vs. inflexible. Now’s the time to change that. When everything seems to be swirling, focus on what’s FLEXIBLE.

Too often, organizations invest in tools without first addressing risk management foundations—building a structured mitigation plan helps avoid reactive decisions and supports long-term resilience when uncertainty strikes. An IT risk mitigation plan starts with identifying potential threats—these could range from outdated software to human error or natural disasters. After pinpointing risks, assessing their likelihood and impact enables data-driven prioritization. This helps organizations allocate resources efficiently, focusing on the most critical threats first. Tracking risks is essential, especially those with recurring patterns like phishing attempts or power outages. Implementation is only effective if it's dynamic—continuous monitoring and updates ensure the strategy stays aligned with evolving technologies and business contexts. #CyberSecurity #RiskManagement #ITStrategy #DigitalTransformation #Infosec