Specifics and typology of risk management tools for innovation and investment projects

Abstract

The article presents a theoretical and methodological generalization and develops a comprehensive multi-level typology of risk management tools for innovation and investment projects under digital economic transformation and global instability. It is substantiated that the qualitative specificity of such projects stems from a dual ontological conflict between the conservative financial imperatives of capital investment (NPV maximization, liquidity, fixed paybacks) and the heuristic, non-linear nature of scientific and technological search. This duality exposes projects to genuine Knightian uncertainty, creating systemic phenomena such as the “Death Valley Curve,” the Sunk Cost Fallacy, and severe information asymmetry. Using the Technology Readiness Levels scale (TRL 1–9), we identified a fundamental dynamic risk paradox: while the probability of technological deviation is extremely high during early exploratory stages (TRL 1–3), financial exposure remains bounded by initial R&D budgets. Conversely, during industrial pilot and commercialization phases (TRL 7–9), the likelihood of failure decreases, but potential financial losses scale exponentially. To address this, the study proposes a structured matrix of risk management tools, categorizing methods into qualitative-heuristic, quantitative economic-mathematical, organizational-process, financial-structural, and digital analytics tools across four core response strategies (avoidance, mitigation, transfer, acceptance). The study formalizes an advanced mathematical framework for risk quantification. This includes an expanded Net Present Value (ENPV) model utilizing a cumulative CAPM discount rate with innovation-specific risk premiums, real options valuation (ROV) to measure managerial flexibility, Monte Carlo simulation for Value at Risk (VaR) estimation, and Fuzzy Set Theory for decision-making in non-structured environments. Organizational execution protocols based on the Stage-Gate framework and international standards (ISO 31000:2018, PMBOK Guide 7th Edition, COSO ERM) are integrated to shift the managerial paradigm from passive loss avoidance to proactive navigation within uncertainty. Keywords: innovation and investment project, risk management, Knightian uncertainty, Technology Readiness Levels (TRL), CAPM model, Real Options Valuation (ROV), Monte Carlo simulation, Fuzzy Logic, Stage-Gate, Digital Twins.