November–December 2009

S N A P S H O T
Integrating Risk Management into the Strategic
Planning Process at Canadian Blood Services
By Dodge Bingham, Manager, Palladium Group, Inc.

In the aftermath of the global financial crisis, organi- the BSC management system and its pioneering
zations all over the world are beginning to manage work in building its Office of Strategy Management
C A S E

risk in earnest—by moving it from a siloed to a central earned it a place in the BSC Hall of Fame for
business activity. Experienced users of the strategy Executing Strategy in 2007.
map and Balanced Scorecard are ahead of the game:
CBS’s transformation has taken it from strategy
they realize that the BSC management system represents
management to enterprise risk management (ERM).
not only an appropriate tool for risk management but
In recent months, CBS began evolving its ERM into a
also one that allows integration of risk management
process that is integrated with strategy management.
with strategy and performance management—the
ideal. Consider this summary example from veteran Figures 1 through 3 illustrate the steps involved
BSC user Canadian Blood Services. in identifying and synthesizing risks, the first two
steps in CBS’s risk methodology. Figure 1 shows
At Canadian Blood Services (CBS), managing risk
where risk management enters the process—in the
is literally a matter of life or death. CBS, the blood
Translate the Strategy stage. Figure 2 shows the key
supply system provider for Canada (except Quebec),
questions CBS asks in the first two steps. Subsequent
was created in 1998 in the wake of a national health
steps involve analyzing the risks (e.g., vulnerability
crisis, when HIV and Hepatitis C tainted the nation’s
and magnitudes, mitigation actions) and creating
blood supply (then managed by the Canadian Red
a risk profile (e.g., devising a risk heat map and
Cross). Since its inception, CBS has transformed itself
creating an escalation plan).
into a model of management excellence. Its use of
Figure 3 shows how CBS identifies critical measures
1. —not merely measures of performance against key
Process
objectives, but measures that will help CBS track
Define destination and manage the risks to those objectives. CBS
1. Quantify the vision and gap
2. Define the change agenda
decomposes each objective to arrive at key drivers
3. Define issues and ultimately the most critical measures. For illus-
trative purposes, only one strategic objective is
Develop the strategy shown. I
1. Construct strategic analysis
2. Formulate the strategy

Translate the strategy
1. Strategic objectives
2. Performance measures
3. Strategic risks
Develop the plan
1. Identify strategic initiatives
2. Select initiatives
3. Assess risks
4. Develop business plan
2.
Process Major Question
A. Identify risks
A. Risk identified What risks will prevent
1. Identify the objective
us from achieving our
B. Risk synthesized 2. Select the drivers
objectives?
3. identify the gaps and risks
B. Synthesize the risks What are the top risks for
C. Analyze risks
1. Review risk across objectives analysis and monitoring?
D. Create risk profile 2. Create synthesis of key risks

3.
Objective Primary Drivers Secondary Drivers Measures

1. Alignment of 1a. Verify demand for new services 1a. Acceptance rate among physicians
offerings to
physician needs 1b. Physician use of new services 1b. Usage rate among physicians

Risk: Loss of service to hospital;

Partner with
trend to consolidate services
customers and
stakeholders

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Balanced Scorecard Report: The Strategy Execution Source, ©2009 Harvard Business Publishing and Palladium Group, Inc. and used by permission.