Incorporating Enterprise Risk Management in the Business Model Innovation Process

Purpose: Relative to other types of innovations, little is known about business model innovation, let alone the process of managing the risks involved in that process. Using the emerging (enterprise) risk management literature, an approach is proposed through which risk management can be embedded in the business model innovation process.

Design: The integrated business model innovation risk management model developed in this paper has been tested through an action research study in a Danish company.

Findings: The study supports our proposition that the implementation of risk management throughout the innovation process reduces the risks related to the uncertainty and complexity of developing and implementing a new business model.

Originality: The study supports the proposition that the implementation of risk management throughout the innovation process reduces the risks related to the uncertainty and complexity of developing and implementing a new business model. The business model risk management model makes managers much more focused on identifying problematic issues and putting explicit plans and timetables into place for resolving/reducing risks, and assists companies in aligning the risk treatment choices made during the innovation process with the company’s corporate strategy and risk appetite.