Realigning Risk Management in the Light of Industry 4.0

Abstract

German industry is the leading global supplier of industrial products and of significant importance for the German economy. To maintain and grow its competitive edge, both German industry and the German government actively drive innovation in products and production processes. One such innovation opportunity lies in taking advantage of the so called fourth industrial revolution. This revolution is condensed in the buzzword Industry 4.0 which is incidentally of German origin. It promotes the computerisation and digitalisation of production. At this very early stage, industrial enterprises envisage the utilisation of advanced computer technology within the fields of production, value chains and products. While this industrial revolution is imminent, its implementation will result in complexity and uncertainty but risks induced by Industry 4.0 and its management have not been examined so far.This research paper recommends that risk management techniques should realign towards qualitative measures to cope with the emerging technological change. Due to the complexity and uncertainty accompanied by the introduction of Industry 4.0, we recommend a holistic approach to risk management. Risk governance, its components and measures, on an enterprise level, will be introduced within this paper to support enterprises in taking advantage of Industry 4.0 and thereby secure its competitiveness for their future.