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Risk analysis example 1: Innovation Systems, Inc.

Company profile

Innovation Systems, Inc. has been in business for about 10 years. It currently has one major successful product. A research strategy is in place but there is a 1 in 3 chance that this strategy will fail to support the company in the long term. Risk analysis indicates that this company is in a position to reduce this risk by implementing one of two options.

Initially funded by venture capital, after a rocky start, Innovation Systems eventually successfully developed a revolutionary product X. Innovation Systems, Inc. has exclusive rights to this new technology and there are multiple patents. Product X has been on the market for 3 years and the profits are about 20 MM per year. There is a high degree of confidence that these profits will continue or increase over the course of the remaining 17 year life of the patents.

Due to the immense success of this first product Innovation Systems, Inc. has been able to build up its research activities with the objective of establishing a long term business based on innovation provided by its own high risk, high reward research activities. It is a vibrant, high energy company, staffed and run by highly motivated, talented people. Hopes for the future are high.

The current research strategy comprises 6 concurrent high risk projects, 1 medium risk project and one low risk project. The latter two projects are in continual support of product X and occasionally provide lucrative spin-off products, while the high risk projects are in new technological areas.








Presentation

Each slide is on a separate page and can be accessed from the index. Each page includes brief explanatory notes.

Slide index - ISI

1. Research Strategy Review- title slide

2. Current research and company profit performance

3. The future - a potential disaster foreseen

4. Research strategy risk analysis - includes research project parameters

5. Two alternative strategies and the pros and cons - text

6. Risk based strategy analysis - current strategy vs. alternative 'a' - 2 graphs

7. Risk based strategy analysis - current strategy vs. alternative 'b' - 2 graphs

8. Conclusion - text

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