The Strategy Map is perhaps one of the most powerful management tools to emerge as part of the Balanced Scorecard approach over the last 20 years.
The Strategy Map provides a simple, visual representation of an organisation’s strategy. However, few Enterprise Risk Management (ERM) solutions provide Strategy Map functionality. So should a Strategy Map be part of ERM framework?
We believe there are three reasons why a Strategy Map is a vital part of every ERM framework.
1. Set the Strategic Context
Many ERM standards, such as COSO Enterprise Risk, BS31100 and ISO31000, state that the ERM framework should be developed to support the organisational objectives. The Strategy Map is the tool that enables organisations to clarify their organisational objectives, communicate and cascade those objectives through the organisation. This provides the framework and context, to develop an ERM framework which is aligned to the organisational strategy and is an enabler of the execution of that strategy rather than been a ‘paper work’ exercise.
2. Enable and Encourage the Right Conversation
The first question that is often asked when designing a ERM framework is “what are our risks?”, Manigent believes this is the wrong question. The right question is, initially, what are we trying to achieve? And therefore, what are our key threats and opportunities? At a strategic level this would mean what are our objectives? At a operational level this could include what are our most vital processes, initiatives or systems?
Starting your ERM framework deployment with the question “what are we trying to achieve?” ensures that the right conversation around risk develops and the focus remains on creating real business value.
3. Use the Strategy Map to Communicate the Process and Value of the ERM
The final reason for including a Strategy Map into your ERM framework is to provide a framework to enable the risk management team to communicate the business value and effectiveness of their risk management efforts to the wider business. Read more about this in our recent blog - Strategy Map for Risk Management Effectiveness.
Normally deployed as part of a corporate performance management framework, the Strategy Map is a proven tool for improving strategy execution, however, it has a vital role to play in any ERM framework deployment.