An Insurance-Like Mechanism to Manage Technological Risk

This contribution studies the management of a fundamental risk in any R&D process in both SMEs and large companies. Measuring this technological risk is not part of normal due-diligence process. R&D Advancements are entail major risks and uncertainties. In these circumstances decision makers in the Organization for Economic Co-operation and Development (OECD) has came up with an insurance-like mechanism delivered through the tax system as a solution to control this risk. The mechanism differs from a classic grant program in that it acts after the fact and partially reimburses qualified expenditures. This mechanism is intended to encourage businesses of all sizes, particularly medium size companies and start-ups, to conduct research and development that will lead to new, improved, or technologically advanced products, processes, devices, and materials. Firms facing technological risk should prove that they have methodically advanced their technological knowledge base. Aside from OECD members many other countries such as India, Mexico and Peru has adopted these measures.

Keywords:

Technological risk , Risk control , Research and development