Certified Risk Analyst (CRA®)

Program
Understanding, evaluating and
implementing effective risk
management
Balanced
Scorecard
Balanced Scorecard
Balanced Scorecard
 Balanced Scorecard
• Learning and Growth
- Deals with measures of corporate success in
relation to how it learns as it develops over time
- If company makes mistakes in any way, then
it must learn from them and there must be
mechanisms in place to make sure that
happens.
- Growth also includes the way in which it
generates leaders for the future and equips
employees with necessary skills that will
ultimately sustain its business
- E.g., skills sets, employee relations and
satisfaction, and staff competences
 Balanced Scorecard
• Internal Business Processes
- Include all operations within the organization
- Measures would cover whether or not value
is being delivered to target segments, and
value chain is tracked
- Innovation and new product development
would also be measured
- E.g., information technology, manufacturing,
marketing operations such as customer
service, procurement and quality processes
 Balanced Scorecard
• Customers
- Customer satisfaction
- Get more new customers
- Retain customers and extend new
products and services to them
- Make sure needs of target segments are
met
- E.g., customer retention and
recruitment, customer satisfaction, etc.
 Balanced Scorecard
• Financial
- Return on Investment (ROI)
- Shareholder value
- Resources, individuals and teams
within a business are aligned with the
scorecard objectives, measures, targets
and initiatives for each of the four areas of
measurement
 Balanced Scorecard - Sample
• Place the 8 objectives and measures into the four
balanced scorecard metric categories of Finance,
Customers, Business Processes and Learning and
Growth
• Objectives and measures may not be related -
meaning objective (1) and measure (a) do not belong
together
• Place the objectives first, then place the measures
 Balanced Scorecard - Sample
• Categorize the following as Financial, Customers, Processes, or Learning and
Growth

Objective Measure
1. To be the cost leader in its market by 2015 a. Average time taken for customers to
receive complete orders
2. To reduce customer churn by 75% within b. Customer retention rates
12 months
3. To lead the market in speedy delivery by
2018 c. Return On Capital Employed (ROCE)

4. To build a sports and social club by March d. Employee satisfaction rates

2015
5. To increase profitability by 20% by 2020 e. Statistical process control
6. To produce products that are right first time f. Employee retention rates
within 3 months
7. To train and develop all team leaders by g. Customer feedback or complaints
2018
8. To achieve 99% customer satisfaction within 5 h. Unit cost
years
 Balanced Scorecard - sample
• Finance

Objective Measure
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? ?
 Balanced Scorecard - Sample
• Finance

Objective Measure
To be the cost leader in our Unit cost
market by 2015
To increase profitability by 20% Return On Capital Employed
by 2016 (ROCE)
 Balanced Scorecard - sample
• Customer

Objective Measure
? ?
? ?
 Balanced Scorecard -Sample
• Customer

Objective
To reduce customer churn by
75% within 12 months
To achieve 99% customer
satisfaction within 5 years
Measure
Customer retention rates
Customer feedback or
complaints
 Balanced Scorecard - Sample
• Business Processes

Objective Measure
? ?
? ?
 Balanced Scorecard – Sample
• Business Processes
Objective
To lead the market in speedy
delivery by 2016
To produce products that are
right first time within 3 months
Measure
Average time taken for
customers to receive complete
orders
Statistical process control
 Balanced Scorecard - Sample
• Learning and Growth

Objective Measure
? ?
? ?
 Balanced Scorecard - Sample
• Learning and Growth

Objective
To build a sports and social
clubby March 2018
To train and develop all team
leaders by 2014
Measure
Employee satisfaction rates
Employee retention rates