Aligning Enterprise Risk

Management with Strategy

Through the BSC:

The Bank of Tokyo-Mitsubishi

Approach

Group A2
T A Pai Management Institute, Manipal
 The Risk

If you Google’d “Enterprise Risk

Management,” how many hits would you
get?
 About 79,200,000 (24 March, 2013)
 Risk & Strategy
“You can resist an invading army: you cannot resist
an idea whose time has come.” - Victor Hugo

“Less than 10% of strategies effectively formulated

are effectively executed.” – Fortune Magazine

Why?
 We can’t DESCRIBE a strategy
 We don’t MANAGE strategy
 Risk & Strategy
“Strategy that lacks alignment to risk
management is not only insufficient but
downright dangerous… Risk management is
pointless unless it is closely tied to the
company’s strategic objectives.”

- T. Nagumo, Bank of Tokyo-Mitsubishi

COSO-ERM and BSC Linkage
 ERM & BSC
• ERM can be incorporated into performance
management systems that translate strategy
into actionable terms such as the balanced
scorecard (BSC)
• The BSC communicates strategy and
strategic objectives through performance
metrics that are segmented into four major
stakeholder perspectives
 ERM & BSC
• Customer: How do customers view the
organization?
• Internal process: Where must the organization
excel?
• Learning/growth: How can the organization
continuously improve and create value?
• Financial: How do shareholders view the
organization?
ERM & BSC
ERM & BSC
ERM & BSC
 Strategy Risk Management Double Loop

In Bank of Tokyo-
Mitusbishi
 Conclusion
• ERM requires one to take a broad view of their
organization to understand the risks that affect all
business units. Similar to ERM, the BSC requires
one to adopt a comprehensive viewpoint of the
organization through its four perspectives

• The BSC enables ERM efforts to be aligned to

corporate strategy and drive individuals to
understand their roles in managing risk
Thank you!