Using a Balanced
Scorecard to
Manage Risk
BY DAVID A. WESTMAN
AND JIM HAGESTAD
Risk management continues to be one of the key fiduciary duties of boards of directors, and its importance has been reinforced as associations grapple with
diminished membership levels and revenue from their
products, services and programs because of the eco-
nomic downturn. However, risk management should
extend beyond the financial prism and consider a
“balanced scorecard” of risks.
Introduced by Robert Kaplan and David Norton in
the January/February 1992 issue of the Harvard Business Review, the balanced scorecard has since been
embraced by organizations worldwide to manage and
improve performance at the individual, departmental
and organizational level. It includes four “
perspectives” from which to analyze performance: financial,
customer, internal business process, and learning and
growth.
