The world of business has undergone unparalleled change in recent years as a result of dramatic social, economic and political events. Senior managers and boards are faced with a business landscape that bears little resemblance to the world in which they began their careers and are challenged with more risks than ever before.
A new model for management in a new time, this book introduces the Risk-Based Performance Management methodology. This pioneering and practical framework enables senior management to understand, manage and control the risks facing their organizations while exploiting emerging opportunities to gain and maintain competitive advantage. By establishing the wider context of change within business, from the Credit Crunch, the upheaval of the Arab Spring, the uncertainty created by the Euro-zone Crisis and the increasing global influence of social media, the authors explain how and why a revolution is taking place in how organizations are structured, regulated and go to market. This results-focused guide to embedding risk management into strategic and operational decision-making gives executive teams the tools to align their risk-taking to strategy, enabling them to drive sustainable success while operating within appetite.
Chapter 3 - Integrating Risk Frameworks & Standards with the Balanced Scorecard
Chapter 11 - The Enabling Role of Technology
Risk-Based Performance Management (RBPM) is a strategic execution methodology, developed to enable organisations to sustain strategy execution by integrating business strategy, performance and risk management. Core to Risk-Based Performance Management (RPBM) is the understanding of ‘risk appetite’ and how the organisation can operate “within appetite”. Building on existing and widely deployed methodologies, namely the Balanced Scorecard and COSO framework, Risk-Based Performance Management is a proven response to the performance and risk challenges presented in today’s business environment. The Risk-Based Performance Methodology was developed to enable clients to meet the challenges of implementing Basel 2 and Sarbanes Oxley alongside performance management and other management information process. In more recent months, the credit crunch has added another set of challenges when considering performance and risk management processes.
The RBPM framework describes a process from the capturing of the business drivers (the fundamental drivers of value of the particularly industry and organisation) to the delivery of shareholder value. Sequencing from the identification of the drivers of value to the delivery of shareholder value is through seven disciplines:
And an eighth (appetite) which serves as the glue that binds the others together into a unified strategy/risk management approach for these ‘continuous turbulent times’. We do not label appetite a discipline as its influence weaves through the seven identified disciplines.