An introduction to the Enterprise Risk Scorecard

Abstract

PurposeThe purpose of this paper is to introduce the concept of an Enterprise Risk Scorecard.Design/methodology/approachWith 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.FindingsThe 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/implicationsUtilizing 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/valueThis 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.