Innovation and Risk Management

for a project that has five innovative aspects each with a 90% degree of certainty, the overall probability of project success, P = 0.9 = 59%. For avoidance of doubt, to put it another way, the project has a 41% chance of failure This does not make for a good investment case. 

This simple piece of arithmetic highlights the key strategies for risk management and its minimization in developing new technologies - to minimize the number of Ns and maximize their respective C-values. 

The reality of risk assessment in investment for new processes is somewhat more complex than this. The specific innovations are often not discrete and the confidence of success of each item is a probability distribution rather than a single value. Techniques to handle the mathematical aspects have been available for many years [61] and computational tools are now readily available. A detailed coverage of managing uncertainty is beyond the scope of the current text and this simplistic approach suffices to address the key question of how to effectively manage the N-and C-values. 

Brewing of Beer, in Food and Beverages, 18. (eds. Packer, ).E. and Whiting, R.), New Zealand Institute of Chemistry, New 19. 

Thomas, H. (2004) The Realities of Small Scale Continuous Processing, in IChemE Switching from Batch to Continuous Processing Conference, November 2004, London. 

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