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Risk and innovation : towards a framework for risk governance in social innovation . Stephen P Osborne (University of Edinburgh Business School, Scotland). Learning from innovation in public sector environments (LIPSE). Outline of presentation. Risk Risk and public services

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risk and innovation towards a framework for risk governance in social innovation

Risk and innovation: towards a framework for risk governance in social innovation

Stephen P Osborne (University of Edinburgh Business School, Scotland)

outline of presentation
Outline of presentation
  • Risk
  • Risk and public services
  • Risk and social innovation
    • Locus of risk
    • Risk in public policy
    • A new starting point
  • Risk: three approaches
  • Risk and social innovation: the challenges

University of Edinburgh Business School

slide4
Risk
  • Risk - ‘the probability that something might happen’
    • Risk (known unknowns) and uncertainty (unknown unknowns) a key differentiation
    • Risk is socially constructed: what is a risk and how much are we prepared to bear, for what outcomes?

University of Edinburgh Business School

risk and public services
Risk and public services
  • Risk core element of public services (e.g. open heart surgery, community care, new business support)
  • Research on risk in public services limited
    • Risk management as reducing public service accountability (Harman 1994)
    • Risk as higher for public than private services and concerned with risk minimisation (Vincent 1996)
    • Risk management as a ‘blame game’ (Hood 2002)
    • Risk as multi-faceted and complex phenomenon in public services (Lodge 2009)

University of Edinburgh Business School

risk and social innovation
Risk and social innovation
  • Social innovation is a key policy trajectory in the UK, across Europe – and elsewhere
    • ‘Social innovation’ is poorly understood and over-used
  • Innovation as a process of discontinuity not gradual change and therefore…
    • Risk is a key element of the social innovation process but is also poorly understood in policy and practice in public services

University of Edinburgh Business School

slide7

Four types of innovation

    • Incremental (developing existing services and skills)
    • Expansionary (meeting new needs using the same skill base)
    • Evolutionary (meeting existing needs using new skills)
    • Total (meeting new needs using new skills)

University of Edinburgh Business School

locus of risk in social innovation
Locus of risk in social innovation
  • Consequential – direct risk to service user
  • Organisational – risk to professional/organisational reputation or legitimacy
  • Behavioural – risk to stakeholders surrounding the service and/or the wider community

University of Edinburgh Business School

risk and social innovation public policy the example of the uk
Risk and social innovation public policy: the example of the UK
  • Public policy acknowledges complexity of risk in innovation but rarely moves beyond bland guidance in practice (Audit Commission 2007, Cabinet Office 2008)
  • NESTA/Young Foundations – need to ‘manage risk not eliminate it’ (2008)
  • Dominance of actuarial approaches to risk (NAO 2000, ALARM 2009)
  • AND CONSEQUENTLY scant guidance on the specific challenges of risk governance in innovation, such as
    • Risk as a positive element of innovation process
    • Co-production
    • Negotiating across multiple/contested stakeholders

University of Edinburgh Business School

risk and social innovation and risk a new starting point
Risk and social innovation and risk: a new starting point
  • Understanding risk in social innovation
    • Requires acceptance of its inevitability, the need to govern it and make decisions about acceptable levels of risk for social benefit
    • Requires an ‘open systems’ approach,
      • both because of the fragmented nature of public services delivery and
      • because effective innovation requires a collaborative and open orientation

University of Edinburgh Business School

risk governance three approaches i
Risk governance – three approaches I
  • I - Risk minimisation(actuarial) acknowledges risk and seeks to minimise its presence and costs (closed systems approach) {Stultz 1996}
  • II - Risk analysis(health & safety) acknowledges risk and seeks to manage its consequences (natural systems approach) {Rasmussen 1997}
      • Risk analysis
      • Risk assessment
      • Risk management
  • Both these approaches see risk as negative and avoidable – but for innovation risk is necessary and must be negotiated

University of Edinburgh Business School

risk governance three approaches ii
Risk governance – three approaches II
  • III – Negotiated risk governance (Renn 2008)
    • Technocratic (decision taking on technical grounds by professionals) {risk minimisation}
      • Limited by scientific knowledge
      • Ignores social context and construction of risk
    • Decisionistic (combines above with political decision making) {risk analysis}
      • Process of negotiation of risk for given outcomes
    • Transparent (combines above with stakeholder engagement)
      • Involvement of end users of innovation/others
      • True ‘risk governance’
      • Resonance with ‘digital era governance’

University of Edinburgh Business School

the challenge
The challenge…
  • How to govern risk in innovation in public services in a way that
    • Acknowledges it as an inevitable part of the innovation process,
    • That is flexible to range of different levels of risk and uncertainty in different public service innovations,
    • That engages the full, appropriate, range of stakeholders for any innovation, and
    • Is sophisticated enough to enable the negotiation of acceptable levels of risk for given outcomes.

University of Edinburgh Business School

risk and innovation an integrated framework
Risk and innovation – an integrated framework

University of Edinburgh Business School

risk governance in social innovation in practice
Risk governance in social innovation in practice

Stage 1: Adopt an appropriate mode of risk governance – not normative! (all)

Stage 2: Analyse the type of risk and where it falls (all)

Stage 3: Identify potential and perceived risk and benefits/outcomes (all)

Stage 4: Collaborate with stakeholders to reach shared understanding of acceptable risk (RG)

Stage 5: Build in accountability (RG)

University of Edinburgh Business School

an implementation checklist
An implementation checklist
  • How is risk constructed in social innovation in your service and understood by the different stakeholders?
  • What are the requisite governance structures?
    • How to positively engage professionals, politicians, citizens, and/or users to an effective resolution
    • Regulatory, political and cross-organisational forms
    • Can governance models keep up with an information rich society?
  • What skills will these individuals require for effective resolution?

University of Edinburgh Business School