Integrating Risk and Performance In Management Reporting

This CIMA report provides insights into how it is possible to link risk to performance management via top management reporting. It examines how risk-related information is reported to senior managers, and how it is linked to performance management.

 

Key findings:

  • Risk and performance are related, but the combination of risk and performance information into a single instrument is not always the most feasible solution to reach alignment.
  • The way in which risk is related to performance management is based around a variety of organisational elements that may inhibit or conversely facilitate the integration of risk and performance management processes. For instance:
  1. The presence of a different periodicity of risk and performance reporting may limit their integration.
  2. The presence of a clear cut strategy that serves as a reference point for both risk and performance targets may foster alignment.
  • Risk is often implicitly related to performance management. Performance management tools can provide risk information without much additional efforts. For instance:
  1. Performance reports can contribute to develop an awareness of emergent issues by highlighting performances that are changing unexpectedly.
  2. In certain areas, for example Health and Safety (H&S), KPIs can become good measures around risk. Trends in the number of incidents (or near misses) can be analysed to understand whether the business is becoming more or less risky.
     

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