Risk Management: Catalyst for Innovation

By Paul Parks

Can the risk management function, and more generally the finance organization, be a catalyst for innovation?  Of course they can.  I have seen many examples where the finance organization influenced, enabled and even drove company innovation.

Better risk management, better performance

Ernst & Young released a study last year that shows organizations with more mature risk management functions perform better than their peers.  Understanding opportunity costs, cost structures and cross-functional issues places risk management professionals in a unique position to influence strategic decisions.

Some might argue that risk management can inhibit innovation.  To the contrary, effective risk management brings rigor and credibility to innovation programs, leading to better outcomes.