Managing Risk in the Industry 4.0 era.pptx

Addressing risk in business management.

1. Managing risk in the i4.0 era Prof.ssa rossella canestrino Parthenope university - naples

2. LECTURE OUTLINE I PART A. UNDERSTANDING THE NOTION OF RISK AND RISK DRIVERS A.1) Risk vs Business Risk definition A.2) Types of Business Risk A.3) The uncontrollable risks: the experience of Beatik B. RISK TAKING B.1) The cultural drivers of Risk Taking B.2) Hofstede’s Model II PART A. UNDERSTANDING THE RISKS of I4.0 A.1) Opportunities and Risks of I4.0 A.2) The adverse Consequences of of I4.0: the Digital Divide B. OVERCOMING THE RISKS OF I4.0: THE EMERGING ROLE OF S5.0

3. I PART

4. Risks are part of everyday life

5. ABOUT ME … Reputational damage (low level of knowledge and competences) Research risk (failure in getting the research results – low level of publications) Project Management Risk What kind of risks you face?

6. WHAT IS RISK? …potential for unwanted, adverse consequences to human life, health, property or the environment …chance or possibility of loss, injury, endangerment or exposure …likelihood of some undesirable event or negative outcome occurring to a participant Risk is the possibility that something “bad” might happen Risk VS business risk

7. Types of business risks

8. Types of business risks

9. Types of business risks

10. Types of business risks Natural and economic disaster Geopolitical and environmental changes Competitive risks with medium-term impact Go to: https://public.emdat.be

11. ACTIVITY DESCRIPTION Go to: https://ted.uek.krakow.pl/output-2-the-casebook-how-to-do-business-in-digital-era/ Read the case the Beatik application (case n.1) In class discussion AVAILABLE TIME : 15 minutes before discussion Managing the incontrollable : the experience of beatik

12. Object: tablet application developed by RevInClassic (spin-off company of the University of Jaén ) Target: musicians and the institutions they belong to, such as orchestras, conservatoires and music schools, from performance preparation to sharing annotations and score distribution. Main Advantage : reduction in the quantity of paper used in distributing sheet music, its storage and transportation (costing saving €150.000/institution/year); the experience of beatik (1)

13. Best-in-class Score : Active listening of all instruments of an orchestra or group of musicians. Annotations management . The only in-real-time score annotations exchange that facilitates collaborative work among musicians. All-in-one management tool for music institutions for effective administration of musical information during preparation and performances of musical pieces Go to: https://www.youtube.com/watch?v=aFi5ql3WcIU the experience of beatik (2) – Other advantages

14. the experience of beatik (3) – The failure Despite being a relevant innovation in the field of music, RevInClassic ceased to exist in 2021, pressured by the economic crisis derived from the Covid19 pandemic, since the economic and social consequences derived from the pandemic caused the cancellation of musical events around the world.

15. How could Beatik have mitigate the effect of external risks? the experience of beatik (2) – OPEN DISCUSSION

16. Managing the uncontrollable Tail-risk tests Scenario planning War gaming

17. Risks are Part of Everyday Life Skydiving Horseriding Reading Rock climbing Saving money Stock trading

18. ‘D egree to which managers are willing to make large and risky resource commitments - for example, those which have a reasonable chance of costly failure ’ (Miller & Friesen, 1978, p. 923) All firms deal with risk at some level: “safe” risk (low uncertainty / small resource commitments). “high risk ” (high uncertainty / resource commitments) Risk taking behavior

19. CULTURE : “ the collective programming of the mind distinguishing the members of one group or category of people from others ” (Hofstede, 1980) DIMENSIONS OF NATIONAL CULTURE : Uncertainty avoidance Individualism vs collectivism Masculinity vs femininity Power distance Long term orientation vs short term orientation Indulgence vs restraint Go to: https://www.hofstede-insights.com/country-comparison/ Risk taking behavior: HOFSTEDE’s MODEL

20. Risk taking behavior: cultural drivers Uncertainty avoidance negatively relates to RISK TAKING Individualism positively relates to RISK TAKING POWER DISTANCE negatively relates to RISK TAKING Go to: https://exhibition.geerthofstede.com/hofstedes-globe/

21. The Less risk-taking Countries in the world Country Uncertainty Avoidance Greece 112 Portugal 104 Guatemala 101 Uruguay 100 Belgium Netherl 97 Malta 96 Russia 95 Belgium 94 El Salvador 94 Belgium French 93 Poland 93 Japan 92 Serbia 92 Suriname 92 Romania 90 Country Uncertainty Avoidance Singapore 8 Jamaica 13 Denmark 23 Hong Kong 29 Sweden 29 China 30 Vietnam 30 Great Britain 35 Ireland 35 Malaysia 36 India 40 Philippines 44 U.S.A. 46 Canada 48 Indonesia 48 The more risk-taking Countries in the world

22. The HIGHER POWER DISTANCE Countries in the world Country Power Distance Malaysia 104 Slovak Rep 104 Guatemala 95 Panama 95 Philippines 94 Russia 93 Romania 90 Serbia 86 Suriname 85 Mexico 81 Venezuela 81 Arab countries 80 Bangladesh 80 China 80 Ecuador 78

23. The most Individualistic Countries in the world Country Individualism U.S.A. 91 Australia 90 Great Britain 89 Canada 80 Hungary 80 Netherlands 80 New Zealand 79 Belgium Netherl 78 Italy 76 Belgium 75 Denmark 74 Canada French 73 Belgium French 72 France 71 Sweden 71

24. Countries with the top start ups in the world Go to: https:// www.startupranking.com /countries

25. II PART

26. UNDERSTANDING THE OPPORTUNITIES AND RISKS of I4.0 BENEFITS RISKS More efficient and effective organizations High Investments Production system optimization Lack of technological infrastructure Innovation in manufacturing processes Lack of knowledge and skills Sustainable production and environmental and social benefits Employees and trade unions suspicion Good customer experience and product satisfaction Cybersecurity, data sharing, and legal uncertainties Quick response of the organization to the changing environment Flexibility of production systems

27. OPPORTUNITIES of I4.0 (1) Efficiency: Flexible and reconfigurable manufacturing systems through intelligent machines will reduce the losses of resources. Physical and information systems of products and services will increase the efficiency of supply chains and production. Effectiveness: Industry 4.0 will increase profitability, innovation and achievement of objectives compared to its competitors. MORE EFFICIENT AND EFFECTIVE ORGANIZATIONS How can productivity be increased? improvement of working conditions and professional skills, greater organizational and collaborative capacity in different areas of the company, ability to learn from each other.

28. OPPORTUNITIES of I4.0 (2) Simulation contributes the optimization and the availability of product data will provide the opportunity to improve its quality. Analysis of the data can develop predictive maintenance models, that will be used to reduce maintenance costs, errors, quantity of raw material, etc. Vertical and horizontal integration will result in shorter time to market and reduced lead times and stock across all elements of the supply chain. PRODUCTION SYSTEM OPTIMIZATION https://www.sciencedirect.com/science/article/pii/S1877050922002423/pdf?md5=abb272ecbf0cb8d58b3ac4deeed148dd&pid=1-s2.0-S1877050922002423-main.pdf

29. OPPORTUNITIES of I4.0 (3) Enabling technologies will encourage the implementation of new manufacturing processes. Industry 4.0 allows the evaluation of the functionality and performance of products and processes through the creation of virtual models (digital twin). Examine the behaviour of the factory in order to make strategic decisions with the aim of optimizing all the processes linked to the production system. INNOVATION IN MANUFACTURING PROCESSES www.businessnewsdaily.com/10156-industry-manufacturing-iot.html

30. OPPORTUNITIES of I4.0 (4) Industry 4.0 improves resource efficiency , reduces waste, and achieves improvements in energy efficiency (additive manufacturing can reduce raw material). Industry 4.0 can reduce the emission of greenhouse gases (carbon footprint will be monitored using control techniques). Quality of the work activity of workers can be improved (demanding jobs will be performed by robots; monotonous tasks will be carried out in an automated way, etc.) SUSTAINABLE PRODUCTION AND ENVIRONMENTAL AND SOCIAL BENEFITS

31. OPPORTUNITIES of I4.0 (5) Industry 4.0 technologies allow companies to increase their competitive advantage over their competitors as the adaptation of products to customer expectations Industry 4.0 also increases the degree of customer participation in the products , having direct or indirect contact with the company and obtaining more power and control over the products. Implementing Industry 4.0 will result in better product quality and safety . GOOD CUSTOMER EXPERIENCE AND PRODUCT SATISFACTION “ The customer experience originates from a set of interactions between a customer and a product, a company or part of its organization,…. This experience is strictly personal and implies the customer's involvement at different levels (rational, emotional, sensorial, physical and spiritual) ”. Gentile et al. (2007)

32. OPPORTUNITIES of I4.0 (6) Industry 4.0 will help the organization to detect and respond to customer needs, competitor actions, and government regulations. Process of digital transformation of production systems will allow organizations to face market variations through the use of a rapid response. QUICK RESPONSE OF THE ORGANIZATION TO THE CHANGING ENVIRONMENT Industry 4.0 enables improved production flexibility (virtualization, decentralization, networking). Flexible production can be achieved through mass customization combinations, manufacturing products in limited volumes. FLEXIBILITY OF PRODUCTION SYSTEMS

33. THE ADVERSE CONSEQUNCES of I4.0: the DIGITAL DIVIDE DOMAIN OF DIGITAL DIVIDE/EXCLUSION (within the 5H Model) TYPE OF DIGITAL DIVIDE/EXCLUSION GOVERNMENT Participation and Exercise of Political Power (Political Rights) Freedom of Expression (Civil Rights) Access to e-gov and e-health services (Social Rights) UNIVERISITY/EDUCATION Development of Socio-cognitive Skills Development of Emotional Skills Learning Achievements and Human Capital Improvements INDUSTRY Access to Labor Market Digital Transformation Readiness CIVIL SOCIETY Creation of online communities Social Engagement Net-Activism ENVIRONMENT Over-exploitation of Natural Resources Climate Changes Access to Scarce Natural Resource

34. I5.0 fosters synergy between humans and autonomous machines instead of competition Triggers the emergence of S5.0 ‘ is an information society built upon Society 4.0, aiming for a prosperous human- centered society’ ( Japanese Government ) OVERCOMING THE RISKS OF I4.0: THE EMERGING ROLE OF S5.0

35. Carayannis E.; Canestrino R.; Magliocca P. ( forthcoming) From the dark side of Industry 4.0 to Society 5.0: Looking ‘beyond the box’ to developing Human-centric Innovation Ecosystems, IEEETEM Gaganis , C., Hasan, I., Papadimitri , P., & Tasiou , M. (2019). National culture and risk-taking: Evidence from the insurance industry.  Journal of Business Research ,  97 , 104-116. Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework.  Harvard business review ,  90 (6), 48-60. Case 1 : Digital transformation of a traditional sector through a University Spin-off: The case of the Beatik application, December 2021, In book: HOW TO DO BUSINESS IN DIGITAL ERA? CASE BOOK (pp.13-17.) Publisher: Department of Public Management. Cracow University of Economics. Rakowicka , 27, 31-510, Cracow, Poland. REFERENCES

36. WORK IN SMALL GROUPS

37. WORK IN SMALL GROUPS Groups - Pros Expose the strengths of digital transformation in the industry. Indicate successful cases known internationally. Groups - Cons Expose the weak points of digital transformation in the industry. Indicate cases where the digital transformation has not achieved benefits at an international level. Will automation take away all our jobs? for David Autor

38. WORK IN SMALL GROUPS