Business Model Canvas
A strategic management visual chart developed by Alexander Osterwalder that allows organizations to describe, design, challenge, and pivot their business model. The canvas has nine building blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. In RBPM, the Business Model Canvas is used to understand the business model and its implications for objectives and risks. It helps organizations identify where risks might emerge and ensures that risk appetite aligns with the chosen business model.
Business Model
A description of how an organization creates, delivers, and captures value. It encompasses the organization's value proposition, target customers, distribution channels, revenue streams, key resources, activities, partnerships, and cost structure. Within RBPM, the business model is a fundamental consideration when determining appropriate risk appetite levels, as different business models have inherent risk profiles. Business model innovation is becoming an increasingly important source of competitive advantage, but such innovation must be pursued within appetite boundaries.
Business Drivers
The fundamental factors that disproportionately influence the success or failure of a business or industry. These critical variables significantly impact an organization's performance and value creation. In RBPM, business drivers serve as the foundation for establishing risk appetite and strategic objectives. Examples might include access to capital, technological innovation capabilities, regulatory environment, or customer demographics. By identifying and understanding key business drivers, organizations can develop strategies that leverage these factors while remaining cognizant of associated risks.
Business Continuity Management
A holistic management process that identifies potential threats to an organization and the impacts those threats might have on business operations. It provides a framework for building organizational resilience and effective response capabilities that safeguard the interests of key stakeholders, reputation, brand, and value-creating activities. Within RBPM, business continuity management connects to operational risk management, ensuring that risk events don't catastrophically impact strategic objectives. It includes developing response plans for various risk scenarios to minimize disruption.
Board Oversight
The supervisory role played by an organization's board of directors in monitoring management's execution of strategy within defined risk appetite boundaries. Effective board oversight involves setting risk appetite, approving risk policies, ensuring appropriate risk management frameworks, challenging management on strategic decisions, and monitoring risk exposure against defined limits. The board should regularly review risk reports, assess the effectiveness of risk management processes, and ensure alignment between risk-taking and strategic objectives. In RBPM, board oversight is a critical governance function.
Blue Ocean Strategy
A strategic approach developed by W. Chan Kim and Renée Mauborgne that challenges organizations to create uncontested market space (blue oceans) rather than competing in existing crowded markets (red oceans). Blue Ocean Strategy involves developing new value innovations that make competition irrelevant by creating and capturing new demand. This approach aligns with the RBPM framework by encouraging organizations to consider both the performance potential and risk implications of pursuing new market opportunities, ensuring that innovation is pursued within appropriate risk appetite parameters.
Balanced Scorecard
A strategic management framework developed by Robert Kaplan and David Norton that translates an organization's vision and strategy into a comprehensive set of performance measures. It provides a balanced view of organizational performance across four perspectives: financial, customer, internal processes, and learning and growth. The Balanced Scorecard enables organizations to track financial results while simultaneously monitoring progress in building capabilities and acquiring intangible assets needed for future growth. It serves as a foundation for the performance management aspects of RBPM.