Journal of Reviews on Global Economics, 2013, 2, 407-415 407 E-ISSN: 1929-7092/13 © 2013 Lifescience Global Innovations in Risk Management as Exemplified by the Polish Insurance Market Adam Sliwinski * , Tomasz Michalski and Anna Karmanska Warsaw School of Economics, Collegium of Management and Finance, Banking and Insurance Institute, Department of Accounting, Poland Abstract: The era of knowledge based economy, which the world is dynamically entering, reveals many new factors and necessities which a modern company needs to consider and cope with if it wishes to stay on in business. The innovativeness of business activity, in a broad meaning of the word, is an area of significant factors. Holistically, one may ask about the borders of innovation applied in business. Are they determined by: the actual needs of end consumers and as a consequence the needs of companies participating in the chain of value delivered to these customers or primarily the actual needs to earn on corporate investments on the customer value chain? This paper analyses the problem of management of innovation programmes and projects introduced by companies from the microeconomic perspective. Its main aim is to show a new approach to innovation cost management and the innovation activity of the insurance sector in Poland. The paper consists of two sections. The first one describes innovation cost management. Innovative companies should be supported by the insurance sector. They should also apply knowledge and appropriately analyse and allocate costs within the algorithms of behaviour compliant with the risk management. The second section analyses the Polish insurance sector with the Multivariate Statistical Analysis. The paper ends with the conclusions with regard to the insurance sector. The examination of the sector shows that the insurance market in Poland in the analysed period was not innovative and it did not create innovation supporting services (and it is where the insurance risk appears due to the financial aspects of innovation). Keywords: Innovation, cost management, risk management insurance. INTRODUCTION Irrespective of the place and time every business activity is risk related. The specific risk factors, risk level and the availability of tools to manage the risk are characteristic of a “given place and time”. The era of knowledge based economy, which the world is dynamically entering, reveals many new factors and necessities which a modern company needs to consider and cope with if it wishes stay on in business. The innovativeness of business activity, in a broad meaning of the word, is an area of significant factors. Innovativeness is a sign of the era of the knowledge based economy and what is characteristic of this era is the fact that its “soft” borders are marked only by business ethics. Holistically, one may ask about the borders of innovation applied in business. Are they determined:  by the actual needs of end consumers and as a consequence needs of companies participating in the chain of value delivered to these customers or primarily  by the actual needs to earn on corporate investments on the chain of value for customers? *Address correspondence to this author at the Szkoa Gówna Handlowa w Warszawie, Al. Niepodlegoci 162, 02-554 Warszawa, Poland; Tel: +48 (22) 564-60-00; Fax: +48(22)5647502; E-mail: asliwin@sgh.waw.pl This paper does not attempt to answer this question. It analyses the problem of management of innovation programmes and projects introduced by companies from the microeconomic perspective. Bearing this in mind, it is necessary to distinguish three areas to focus on in an innovative company: A) knowledge management and diagnosis of innovation potential, B) innovation cost management, C) innovation management in the risk conditions. Innovations, i.e. something new, with no standard set before or only to a certain extent based on well- known models and solutions in each of the aforementioned areas give rise to a specific uncertainty in business activity. Thus, the undertaking of the innovation activity should be preceded by an attempt to identify the risk factors, which may allow for its limitation once identified within this uncertainty. Knowing the risk factors one may undertake attempts to manage in the conditions of risk, which, grossly simplified, may be understood as the application of preventive instruments and solutions focused on the identified risk factors and thanks to it preventing the potential implementation of risk with effects of the scale initially predicted or refunding the incurred losses as a result of the implementation of this risk.