Corporate Risk Management: Associated Risks Term Paper

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When combining the two, future market trends can be more accurately predicted by basic it upon existing trends. In this way, the risk factors associated with both areas of R&D are significantly reduced.

The most prominent risks associated with R&D, as identified above, include market research and competition. In addition to risks associated with market trends, risks posed by competitors can also be mitigated with a combination of strategies. The three remaining categories of R&D include long-term, short-term, and intermediate-term R&D.

Long-term R&D can be associated with the offensive R&D strategy, as it entails a projection of market needs in the long-term. This means that products and services are developed on the basis of prediction rather than fact. The most important reason for this is to rise above the competition. The risk associated with this is the fact that competitors may develop long-term products that exceed the company's projects, thus resulting in a significant loss of revenue. The R&D professional is therefore under great pressure to be creative and innovative in terms of projecting future needs and markets.

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A further risk may then be posed internally in terms of employee overload and stress.

Short-term R&D is generally more secure than long-term R&D, in that the former is based upon current market research and needs. Products enter the market in the shorter term, thus mitigating the risk of competitor developments of similar products. The market research done on the short-term can then serve as a focus for long-term research and diminish some of the risks associated with the long-term strategy.

Finally, intermediate-term R&D carries the risk of potential failure, but does not involve as much financial risk as the long-term option. It may therefore serve as a good option if the company does not have the resources for many long-term projects......

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