Preheat the oven to 425°F. In a large pot on medium heat, fry the chopped bacon until crispy. Remove to a paper towel lined plate.
Remove the bacon grease from the pan. Add the olive oil and onion and sauté until translucent, about 3-4 minutes. Add the rice and stir for a minute. Pour in the wine and mix until the the wine has been absorbed by the rice. Season with freshly ground pepper and stir in the water and chicken broth.
Transfer the rice mixture to a casserole pan and place in the oven. Add the mushrooms and butter to the pot and cook until soft. Stir in the cooked bacon and fresh thyme. Transfer the mushrooms and bacon to the casserole pan and stir the risotto to incorporate.
Return the pan to the oven and bake the risotto until the liquid has been absorbed, for a total of 30 minutes.
Sprinkle the Parmesan cheese over the risotto and serve.