The Future: Enterprise Risk‐Based Performance Management

Enterprise performance management now has much broader umbrella concept of integrated methodologies—much broader than its previously misconceived narrow definition as simply being dashboards and better financial reporting. This chapter discusses that enterprise performance management is an integral part of how an organization realizes its strategy to maximize its value to stakeholders, both in commercial and public sector organizations. It means encompassing enterprise performance management by the overarching concept of enterprise risk management (ERM). Therefore, ERM is not only about minimizing an organization's risk exposure. Quite the contrary; it is all about exploiting risk for maximum competitive advantage. Moreover, a risky business strategy and plan always carries high prices. The author categorizes risk into six broad categories: price risk, market risk, credit risk, operational risk, strategic risk and legal risk. He further discusses that performance management, defined narrowly or broadly, does not currently embrace risk governance. It should; risk and uncertainty are too critical and influential to omit. He concludes by highlighting that the absence of reliable foresight explains why companies seem invulnerable one minute and aimless the next. Thus, an important competency that will be the key to an organization's performance is a combination of forecasting and risk management.