An introduction to the Enterprise Risk Scorecard

Abstract

Purpose The purpose of this paper is to introduce the concept of an Enterprise Risk Scorecard. Design/methodology/approach With the accelerating growth in global risk levels leading to an intense current demand for risk management solutions, an analysis was conducted on whether a scorecard framework could be applied to risk measurement. This analysis included a survey of Kaplan and Norton's voluminous and seminal writings on the Balanced Scorecard, in which, surprisingly, relatively little on the measurement of risk was found. Findings The findings suggest that a scorecard framework could be an effective risk measurement, management and communication tool. For both design and organizational reasons it is recommended that risk scorecards be separate from performance scorecards. Research limitations/implications Utilizing two scorecards – one for performance and a separate one for risk – could provide strategy‐focused organizations with a more comprehensive diagnostic control system. The research implications of this approach could be significant, as it essentially opens up a new field of research. Originality/value This is assumed to be the first formal paper on risk and a scorecard framework. Previous work on integrating risk measurement frameworks is very different from the approach proposed here.