Protiviti’s white paper — Performance/Risk Integration Management Model — PRIM2: The Convergence of Corporate Performance Management and Risk Management — provides a framework for integrating strategy, performance and risk management, and is available at www.protiviti.com. The central premise of that white paper is that a company must consider how to implement an integrated approach and discipline to deploy strategy while also anticipating and managing the associated opportunities and risks. This premise applies whether the company is rapidly growing, focused on establishing sustainable competitive advantage or improving its bottom line.
This white paper is the first of "Early Mover" series that will discuss various aspects of PRIM2 framework with the intent of helping companies become early movers in the marketplace. This paper discusses how proactively and evaluating the risks inherent in a strategy will make the strategy itself more robust and realistic, as well as improve the probability of the company achieving its strategic objectives. Specifically, it discusses the importance of:
- Understanding the critical assumptions underlying the strategy and using contrarian analysis to challenge those assumptions;
- Proactively identifying the uncertainties inherent in the strategy, with a focus on minimizing as much as possible what we don't know about the soft spots in the strategy and business plan and what lies ahead in the planning horizon;
- Using the results of strategic risk analysis to drive monitoring of the external environment; and
- Keeping the risk assessment evergreen as the business environment changes.
When the strategy is made more robust and realistic through the consideration of the underlying risks, and its execution is effectively measured and monitored, management and the board of directors will have increased confidence that shareholder value not only will be created, but also protected. This critical balance enhances corporate performance management and positions the enterprise to become an early mover.