Risk Assessment

Every decision involves some measure of risk.  However, some decisions are more significant than others.  If you are facing a question regarding product, political, trade, investment, management or country risk let our experts help you.  We can identify, quantify and work with you to develop plans to reduce or eliminate the risks inherent in operation in today’s global marketplace.

When introducing a new product, there are four primary risks:

  • Product risk;
  • Market risk;
  • Business risk; and
  • Financial risk.

The nature of these risks differs with the stage of product development organization is. Given below is an illustration of how these four risks change with the product life cycle.

Investigation Stage:

Product risk: Product may not be feasible or lacks unique qualities and cannot be protected.
Market risk: Limited understanding or knowledge of the market can cause a misrepresentation of the growth and size of the market.
Business risk: Great product or technology, but a new product or technology does not translate into a great business.
Finance risk: Proof-of-concept funding for product/prototype is difficult to identify.

Feasibility Stage:

Product risk:The company is focused on product innovation rather than business development. Intellectual property rights remain a concern.
Market risk: Unrealistic market study results can cause misallocation of scarce recourses. Final product design is dependent on successful outcome of market study.
Business risk: Exploring business formation and the plan still lacks expertise and business skills to commercialize.
Finance risk: Cash flow is a problem due to lack of revenues and early proof-of-concept funding is difficult to attract.

Development Stage:

Product risk:Advancing the product from prototype to manufacturing or production environment requires new skill sets. No longer developing product revenue features.
Market risk: Field tests are not positive and / or competitors respond more rapidly than planned.
Business risk: If choosing a business over licensing, an experienced professional management team will need to be identified. The business needs to enter a revenue mode as opposed to the R&D mode of the past.
Finance risk: Significant expenses and no product revenue realized.

Introduction Stage:

Product risk: Demonstrating product features reveals a limited market driven functionality after scaling product production.
Market risk: The reality of the market is rarely as planned. Market acceptance and competitor response are different than anticipated. Limited repeat business can cause uncertainty.
Business risk: Lack of focus as the company moves from a emerging environment to a true business mode of operations.
Finance risk: The burn rate exceeds capital and management tends to focus on safes rather than profits.

Growth Stage:

Product risk: It becomes necessary to refine product features to stay competitive. The demand of new product features drains capital from the growing business.
Market risk: Poor distribution, customer satisfaction and product features are concerns as competitors respond to your initial product launch.
Business risk: Focus becomes an issue as the business becomes more formal with increased demands.
Finance risk: Poor finance or investment strategy can limit ability to grow new personnel and execute new contracts.

Maturity Stage:

Product risk: Minor changes in the product features provide less of an impact. The established product makes it difficult to accept new innovations with the existing structure.
Market risk: Growth rates begin to decline as the existing line of products becomes mature.
Business risk: It becomes difficult to innovate as the need to focus on monthly, quarterly, and annual results becomes the focus.
Finance risk: Poor finance or investment strategy can limit ability to grow new personnel and execute new contracts.

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