RISK MANAGEMENT AND INNOVATION

RISK MANAGEMENT AND INNOVATION

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INTRODUCTION

The practice to identify potential risks in advance, analyze them, and take precautionary steps for curbing/reducing the risk is called risk management. The objectives are not possibly defined by the organizations for the future without risk management (Simpson, 2017). The report will discuss different techniques or methods for risk identification and in the implementation and design of a risk identification process, a good practice will be considered. The report will also discuss discontinuous or radical innovation. The organizational factors which help in encouraging effective innovation will also be discussed in the report.

Adidas manufactures and designs accessories, shoes, and clothing. The company was founded 96 years ago in July 1924 and headquartered in Herzogenaurach, Germany. The company in Europe is the largest manufacturer of sportswear. A range of clothing items is sold by the company varying from women's and men's pants, t-shirts, hoodies, leggings, and jackets. For the Adidas Group, the company is the holding company which comprises of the Reebok sportswear company. The three steps are used on the shoe designs and clothing of the company as a marketing aid which is also the identity mark of Adidas (Adidas, 2021).

QUESTION 1

THREE DIFFERENT TECHNIQUES OR METHODS FOR RISK IDENTIFICATION

The risk management concept helps in analyzing and identifying risks in advance so that necessary precautions are taken by an organization in advance as uncertainty has a foremost impact within the business world. When the risk identification process is neglected by an organization, the operations and functions are not run smoothly (Wanner, 2019).

Risk questionnaire, SWOT analysis, flow chart, risk survey, brainstorming, PESTEL, risk heat map are the different methods available for risk identification (Wanner, 2019).

PESTLE

The in-depth approach through which a detailed view of the environment is generated is PESTLE or PESTEL analysis which consists of Legal, Political, Social, Environmental, Technological, and Economic aspects. External factors or threats are analyzed by an organization through Pestle analysis. The impact of political climate or government on the organization is identified through the political aspect. Risks such as modern slavery in the supply chain, product recalls, and strikes come under economic aspects. Risks that arise from factors such as changing values, consumer behavior, and demographics some under socio-cultural aspect. Risks arise from factors such as transport options and communication technology that come under technological aspects (Perera, 2017). Risks such as environmental taxes, natural disasters, and infrastructure come under environmental aspects. Risks like law changes come under legal aspects. A backdrop is provided through PESTLE for the company's growth. Only one portion of a story is revealed through analysis so a full picture cannot be offered. Internal factors are analyzed through another analysis i.e., SWOT, and also errors are minimized.

Figure 1- PESTLE component's overview

Source- (Perera, 2017).

SWOT ANALYSIS

A powerful tool through which the internal organizational environment is analyzed is the SWOT analysis. Risk identification can be done through this method and to discover and document potential risks, brainstorming and this method can be used together (Gurel and Tat, 2017).