About Risk-based performance

Risk-based performance is a strategic execution methodology which was developed by Manigent, in conjunction with its clients in the financial services industry over the last 2-3 years. Building on the Balanced Scorecard and COSO frameworks, Risk-based performance integrates and aligns performance and risk management processes to enable organisations to manage the trade-off between risk and reward, and drive strategic execution.

Risk-based performance was originally designed to support financial services organisations address the regulatory demands of BASEL 2 (AMA) and Sarbanes Oxley whilst meeting performance goals and delivering their strategy. In the wake of the financial crisis and the increased attention being paid to risk, and specifically risk appetite and exposure, aligning risk and performance using a structured approach such as Risk-based performance is set to provide real, sustainable competitive advantage in the market. It also provides a framework to reduce the cost and burden of engaging with regulators, while improvement the information which underpins this important relationship.

Risk-based performance moves organisations beyond traditional silo performance-only or risk-only processes, providing a comprehensive framework which enables organisations to manage and monitor their risk appetite and exposure within the context of their strategy. It enables organisations to;

• Improve the delivery of their strategy and achieve performance targets
• Improve the allocation and utilisation of their capital
• Reduce cost through reduces in risk-related losses and simplification of reporting processes
• Lower the cost of capital

In addition to input from clients, Risk-based performance was the subject of a year-long academic research project involving 19 financial services companies within the UK financial services industry.