www.medtechchallenge.com

• Understand common startup risks• Evaluate risks for your startup• Develop risk mitigation strategies

• In Australia, only 44% of business survive 4+years

• In any given year, among firms with employees,almost as many firms close or go bankrupt

•Poor risk management is attributed to mostfailures

What’s your chance of survival?

https://www.equitynet.com/crowdfunding-tools/startup-risk-calculator.aspx

o A chance of losseso The possibility of unfortunate occurrenceo Unforeseen events, eventualitieso Occurrence of economical losso Unpredictabilityo The probability of an unwanted or

unavoidable event

What types of risks should you consider within a startup or commercialisation?

oStrategic

oTechnical

oCompliance and/or Regulatory and/or legal

oOperational

oFinancial

oMarket and/or Competition

oCareer and/or People

oReputational

oSystemic and/or Political

1. Likelihood of occurrence

2. Severity of potential consequences

is the art and science of thinking about what

could go wrong, and what should be done to mitigate those risks

in a cost-effective manner

1. Risk Identification

2. Risk Assessment

3. Risk Control (and/or Mitigation)

Ignored Nuisance

Insurable Killer

Minor Consequence

Major Consequence

Low Likelihood

High Likelihood

Risks with

• relatively minor consequences

• relatively low likelihood of occurrence

• minor consequence as a result

Not worth spending a huge amount of time worrying about

• Little things that often seem to go wrong, simple solutions

• Impacts are easy to minimize through behaviour change

Usually solved with a common sense approach

• Risks that could have major consequences but are relatively

unlikely to happen are often insurable

Usually solved with appropriate insurances and procedures

Risks with both:

• a relatively high likelihood of occurrence

• major consequences

Individually, they may seem manageable, but collectively, they represent a true challenge

1. There’s a 90% chance that you’ve identified a genuine market need

2. There’s a 90% chance that your addressable market is as big as you

think it is

3. There’s a 90% chance that you can actually implement your

innovation

4. There’s a 90% chance that you can figure out how to sell it for more

than it costs you to make it

5. There’s a 90% chance that you have assembled the right

management team to do the job

6. There’s a 90% chance that you manage to stay one step ahead of the

competition

7. There’s a 90% chance that you don’t get sued into bankruptcy

8. There’s a 90% chance that you won’t get buried in regulatory red

tape

9. There’s a 90% chance that you don’t run out of money

10.There’s a 90% chance that nothing else goes wrong

Market Risks

Competitive Risks

Technology &

Operational Risks

Financial Risks

People Risks

Legal &

Regulatory Risks

Systemic Risks

Fall into these categories:

Refers to whether or not there is sufficient demand for what you have to offer at the price you set

Many entrepreneurs have failed while

clinging to the belief that the market would

beat a path to their door if they designed a

better mousetrap

Every venture has more competitors and fewer

competitive advantages than it thinks

Figure out what you do better than all of your competitors —whether it be price, features,

quality, or some other advantage — and focus on maintaining your

leadership in that category

• Can your team finalise the product design on a limited R&D budget?

• Will your product work as intended? • Can you find reliable vendors? • Can you manufacture it? • Can you optimise the logistics of product

distribution?• Can you create an effective product

support infrastructure?

The end of the road for any business is running out of cash

For startups, the biggest financial risk stems from not having a Plan B in case

investors and lenders say no

If you do succeed at raising capital, the next trick is to figure out how to start generating enough revenues to cover

your costs before you run out of money

People are, at the same time, the most crucial and least predictable element of any business

The list of possible problems with legal or regulatory is almost endless: tax complications;

disputes from poorly structured agreements; lawsuits filed by a

competitor for intellectual property dispute.

Systemic risks are those that threaten the viability of entire

markets, not just a single firm within a

market

In your teams, identify one killer risk from each

category….

Market Risk:1. _________________________Competitive Risk:1. _________________________Technology & Operational Risk1. _________________________Financial Risk1. _________________________Legal & Regulatory Risk1. _________________________Systemic Risk1. _________________________People Risk1. _________________________

A pragmatic risk management plan is straightforward in concept

Risk Factor

Risk Type

Likelihood

Consequences

Mitigation Tactics

Mitigation Costs

Status

1. Tolerate/Accept the Risk2. Terminate/Elminate the Risk3. Transfer/Share the Risk4. Treat/Mitigate the Risk

Be a leader rather than following in the footsteps

of another.

• Know your killer risks• Have mitigation strategies in place

ISO 31000 has defined management framework as a set of components supporting and sustaining risk management throughout a business organization. (Iso.org, 2012)

• Develop mitigation strategies for your killer risks

Dr. Laura FaulconerCOO

laura@stcaustralia.org0413 467 201

Assumption Possibility of wrong assumption (1-5)

Level of Impact if you are wrong (1-10)

Total Risk Level

My target customer is the owner operator of a tractor trailer truck rather than the owner of a small or medium fleet

3 9 27

Their problem is that they need to buy as much gas for their truck as large fleets, but they don’t get the fuel discounts that group purchasing affords

2 7 14

There are no good options for fuel discount cards that allow owner operators to save 10 cents per gallon or more

5 5 25

Owner operators of trucks get information on new products from trade periodicals and online message boards

5 3 15

The average discount fuel card that owner operators use saves them 5 cents or less

4 3 12

Less than 50% of owner operators use any discount fuel card

4 8 32

We can sell discount fuel cards to owner operators through an inside sales force over the phone

4 8 32