Manage risk
Innovation, by its very nature, carries significant risks. By using an agile and iterative approach, however, you can reduce the risk by building and monitoring feedback loops.
Innovation is trying something new, and therefore the possibility of things going wrong is far greater than when you are carrying out ‘business as usual’. Risk management is about identifying and evaluating risk factors, followed by identifying and introducing measures to mitigate and manage those risks.
Note: Risk management requires a clear understanding of your organisation’s ‘risk appetite’. You can use the tool in the Culture section to analyse your organisation’s risk appetite.
Take a holistic approach
Although Obrecht and Warner (2016) found that having formal risk assessments and monitoring practices in place was less important for success than maintaining a responsive and open attitude to identifying new risks, we believe a responsible innovation process should include a holistic risk management approach across four levels.
The innovation team may be primarily focused on risks to the project and to affected populations, but it is also important to assess risk to your organisation and risk to others who live and work in the context.
Motivation – an organisation that provides wheelchairs and services to people in developing countries – employed its own ‘Protecting the Plan’ method while developing a wheelchair for use in the immediate aftermath of a disaster. Protecting the Plan consists of recognising the key objectives of the innovation at the outset, identifying the threats to achieving these and then taking action to prevent or mitigate these throughout the innovation process.
The Motivation team began its risk assessment process for the innovation by looking forward 6 to 12 months and brainstorming what the project would look like if it ‘went terribly’. As a team exercise, staff then identified what could happen or could fail to happen for this worst-case scenario to come about and created strategies to mitigate or prevent this possible scenario. These strategies were then built into the project plan.
Motivation’s structured approach to risk contributed to the success of its pilot and early diffusion; however this was significantly aided by the strong ability of the Motivation team to work flexibly and responsively to new risks as they arose. This flexibility was vital when Motivation faced surprise setbacks in the pilot, for example when its key implementing partner, Handicap International, was unable to get the prototype wheelchairs into the Philippines after Typhoon Haiyan.
Obrecht, A. and T. Warner, A. (2016) ‘More than just luck: Innovation in humanitarian action’. HIF/ALNAP Study. London: ALNAP/ODI
Level 1: Project
You need to assess the risks associated with the implementation of your innovation project. For example:
- People: Are there critical people for the project who you can’t afford to lose?
- Money: Have you got all the finances you need, including contingency funds, and are you managing expenditure properly?
- Partners: Are you reliant on partners for the delivery and development of aspects of your innovation?
- Failure: What happens if you need to stop, or change direction?
- Health, safety and security: Are you managing the health, safety and security of your staff?
Level 2: Organisation
You need to assess organisational risks, beyond the project level. For example:
- People: Will this innovation create excessive burdens on staff outside of the innovation team?
- Money: Will this innovation create financial risks for the wider organisation?
- Reputation: What are the organisational reputation risks associated with this innovation?
- Licence to operate: Are we risking the authorities banning us?
Level 3: Context
You need to assess risk in relation to the crisis-affected populations you seek to serve, and the other organisations who you are working with. For example:
- Access: Could your innovation, if successful, create tensions in the community between those who are accessing the product or service and those who aren’t?
- Demand: Could your innovation create unreasonable demands on other agencies to provide the same services, when they can’t?
- Security: Does your innovation require security processes that create security problems for other agencies working in the same location?
- Others’ licence to operate: Could your actions lead to other humanitarian actors being banned from operating?
Level 4: Affected Population
Carrying out any form of experimentation with vulnerable groups and with crisis-affected communities is fraught with risk. The organisation – and particularly the innovation team – need to take particular care in this area of risk management. The Crisis-Affected Populations and Humanitarian Contexts sections of this guide discuss how to manage this in much greater detail.
When thinking through risk, you also should remember that risks often affect each other, and that the relationship between different risk factors can easily catch you unaware. Focusing on the immediate impact of a risk without understanding how the change in that risk factor can impact other risk factors needs to be avoided. Most big issues arise when a number of risk factors align and feed into each other. Never look at each risk factor in isolation.
Download our Risk Log template to help identify and evaluate the risks facing your project.