The document discusses how the Bank of Tokyo-Mitsubishi aligns enterprise risk management with strategy using the balanced scorecard approach. It notes that less than 10% of strategies are effectively executed, in part because risks are not properly managed and aligned to the strategy. The bank's CFO, T. Nagumo, believes risk management must be closely tied to strategic objectives. The document then explains how the balanced scorecard can help incorporate ERM into performance management by translating strategy into metrics in four perspectives: customer, internal process, learning/growth, and financial. This allows risks that affect all business units to be managed in a way that is aligned to and drives the corporate strategy.

1. Aligning Enterprise Risk
Management with Strategy
Through the BSC:
The Bank of Tokyo-Mitsubishi
Approach
Group A2
T A Pai Management Institute, Manipal

2. The Risk
If you Google’d “Enterprise Risk
Management,” how many hits would you
get?
 About 79,200,000 (24 March, 2013)

3. 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

4. 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

5. COSO-ERM and BSC Linkage

6. 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

7. 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?

8. ERM & BSC

9. ERM & BSC

10. ERM & BSC

11. Strategy Risk Management Double Loop
In Bank of Tokyo-
Mitusbishi

12. 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

13. Thank you!