The integration between enterprise risk management and performance management system: managerial analysis and conceptual model to support strategic decision-making process

Abstract

The integration between Enterprise Risk Management (ERM) and Performance Management System (PMS) has become a crucial process for managing environmental complexity in companies. In this context, in order to contribute to the research field, this paper follows two purposes: (1) to identify the most relevant risk dimensions, and connected risk drivers, perceived in managerial practices; and (2) to provide a suitable way to integrate ERM and PMS in supporting the strategic decision-making process. Based on semi-structured interviews with a total of 75 senior and middle managers from 25 different Italian companies, the authors developed a conceptual model to support the corporate transition to integrate ERM and PMS processes, built on a specific set of Key Risk Indicators (KRIs) that can enable them to achieve economically and environmentally sound performance.