The Strategy map is one of the most important tools developed by Kaplan and Norton as part of their Balanced Scorecard approach. It is designed to provide a relatively simple way of distilling strategy into a collection of objectives and showing the causal relationships between objectives.
The Strategy map provides a tool for explaining and demonstrating how intangible assets, such as people, information systems, culture, processes etc, create customer outcomes and ultimately deliver tangible financial benefits for shareholders. A well constructed Strategy map should be the summary of the organisation’s 'strategic story' - a narrative which clearly explains what the organisation is seeking to achieve and how they will go about achieving their strategy.
The Stratex solution is designed to provide an integrated approach to strategy execution and risk management based on the Risk-Based Performance Management methodology. One of the key tools within this methodology is the Strategy Map and therefore one of the key features of the Stratex solution is a powerful Strategy Mapping tool.
This leads to a key question – Why is a Strategy Map an important part of your risk management approach?
One of the issues that is often seen in risk (and performance) management initiatives is a lack of clarity around the objectives of organisation or business unit undertaking the risk management project therefore the initiative lacks the required ‘strategic context’ leading to the starting point of the project being ‘What are our risks?’ rather than ‘What are we trying to achieve and therefore what are our risks?’.
While these two questions are very similar, the difference is critical.
Risk Management should be an activity undertaken to support the strategic and operational performance of the business. It should not be approached as a compliance activity (even if the driver behind the initiative may be a regulator), it should always be approached as business activity designed to deliver value and benefit to the business.
In terms of creating clarity around what the business is trying to achieve and how value is created in the business, the Strategy Map is one of the leading tools to visualise and communicate this. Our experience shows that clients who have an existing Strategy Map or develop one as part of their risk management initiative, create significantly more value during their risk initiative and generally create a more focused risk framework, with a more focused suite of risks, controls and indicators. Additionally, using a Strategy Map as a starting point for the risk conversation has a powerful, and positive effect on the level of engagement and business buy-in to the risk initiative.
Another important benefit of using the Strategy Map is that it enables the risk management team to re-position themselves within the business, often moving from a perception of being a ‘compliance’ function to one where the business partner is aligned to business objectives and driving business value.
So before you start your risk initiative, ask yourself- do you have a Strategy Map or can you map one out to easily and quickly visualise and communicate the strategic context within which you are going to deliver your risk initiative, and kick start the risk conversation across your business.