It is being increasingly recognised that integrating strategy management and risk management efforts can bring many valuable benefits. To date their has been no definitive standout approach to integrating the management of strategy and the management of risk. The BSC itself appears an excellent framework to integrate the two. The question now being posed is exactly what is the best way to integrate risk management with the BSC.

asked Apr 13 '10 at 20:31

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Mark Ranford

Mark, Good question. We have seen good presentations here in the US by Bob Kaplan at the Mission Driven Summit in March 2010 about integrating Risk Management with the Balanced Scorecard.

In very simple terms, imagine looking at each of your strategic objectives and thinking about the risk of not achieving the objectives as well as what you can do to reduce the risk. I'd be interested in hearing what others have to say about this topic. Ted

answered Apr 15 '10 at 22:37

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Ted Jackson

Hello Mark

The question of how to integrate Risk Management with Performance Management is one that has been around for many years, and within this more general space so also the connection between Risk Management and Balanced Scorecard. The discussion dates from long before the recent flurry of interest.

In broad terms the two activities necessarily overlap, but you need to be careful about definitions. In particular you need to be clear on what you mean by "Risk Management". Some interpret this from the Financial angle (so more properly the would call it "Financial Risk Management" I guess), and this interest has been fuelled by things like SoX legislation, and the recent financially fuelled calamity. But other perspectives include more general forms of risk - such as product liability (for example food safety), operational and of course 'strategic' risks. How you define the term will naturally influence how you integrate it with Balanced Scorecard.

2GC wrote a presentation and associated research paper on this topic some seven years ago (told you it wasn't a new topic!). You can download these documents (which are still remarkably relevant to the current discussion) from the 2GC Performance Management Resource centre. Find the documents here.

Hope this helps! If you have specific questions arising from these documents, please let me know (either here or by direct contact - gavin [dot] lawrie [at] 2GC [dot] org

answered Apr 21 '10 at 09:03

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Gavin Lawrie

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Asked: Apr 13 '10 at 20:31

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Last updated: Jun 30 '10 at 11:24

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