Risk-Based Performance Management is “cringingly obvious”

I couldn’t tell you how many meetings I have attended in my career where we have discussed risk management, but I can’t recall any meetings where risk management and business strategy were intrinsically linked items on the agenda. Market Risk, Credit Risk, Operational Risk, etc, all had their place in the catalogue of committees with dashboards providing an overview of limits and indicators to the board; however, the translation into the realisation of the business strategy was never apparent. The approach proposed in the book Risk-Based Performance Management is both relevant, insightful and often cringingly obvious.

In recent years, I worked for the Managing Director of an investment bank that distilled the business strategy into three simple goals: make money, control risk, and engage staff. Arguably, the customer dimension was missing, but overall, the simplicity resonated with the organisation and influenced the culture. Unfortunately, without the application of Risk-Based Performance Management, the interlinking between the three goals and day-to-day operations was not structurally exploited, and the limit of what could be achieved with a simple mantra was soon reached.

There is little doubt in my mind that Risk-Based Performance Management offers progression in organisational development by linking strategy and risk to provide a competitive advantage and address many of the topics on the regulatory agenda.

Rick Warley, Managing Director, Rabobank, United Kingdom