About Risk-based performance
Risk-based performance is a strategic execution methodology developed by Manigent. It integrates and aligns performance and risk management processes, enhancing strategic execution through improved management discussions , decision-making and action-taking .
Building on existing, widely deployed methodologies, the Balanced Scorecard and COSO frameworks, Risk-based performance is a proven response to the performance and risk challenges presented in today’s increasingly competitive and regulated business environment.
BackgroundThe Risk-based performance methodology was developed by Manigent founder, Andrew Smart, working with a small number of financial services clients and refined during a year-long academic research project.
The methodology was designed to enable financial services, and other organisations, to meet the regulatory and competitive challenges faced and, in particular, implementing BASEL 2 (AMA) and Sarbanes Oxley whilst attempting to meet performance goals in an increasingly competitive market environment.
Risk-based performanceBuilding on the Balanced Scorecard and COSO frameworks, Risk-based performance integrates performance and risk management processes and tools to provide the information demanded by executives to manage the trade-off between risk and reward, and drive strategic execution.
Moving beyond the traditional silo approach whereby processes are performance focused or risk focused, Risk-based performance provides a comprehensive framework integrating these closely related processes.
Taking a pragmatic and ‘keep it simple’ approach, the methodology addresses some of the traditional issues within performance and risk management. These include the challenge of embedding performance and risk management considerations into the culture and daily decision-making, too much data and not enough information and too many measures but few true indicators.
Highlights of the Risk-based performance methodology include:
- Combining specific data driven indicators with management judgment and experience via the interaction of the Strategy Map and Risk Map,
- Clarifty of information by differentiating between different types of indicators - KPI’s, KRI’s and KCI’s - and differentiating between indicators and measures.
- Combining historical information, measures, indicators and incidents with future-oriented information such as programmes, projects, scenarios and strategic models.