Post by fireopal on Dec 18, 2008 21:26:14 GMT 4
A Practical Approach for Risk-Adjusting Performance
Joseph Calandro Jr.
University of Connecticut; ACE Group
Scott Lane
Quinnipiac University
Ranganna Dasari
Measuring Business Excellence, Vol. 12, No. 4, pp. 4-12, 2008
Abstract:
Purpose: Risk management has grown increasingly popular in recent years due to the recognition that risk should be as actively managed as performance. A key objective of risk management is to evaluate performance in the context of the relative volatility in which business operations are undertaken. However, accomplishing this has generally proven difficult. In this paper, we present a practical approach for risk-adjusting performance.
Design/methodology/approach: This paper presents a practical risk-adjustment methodology that is based on a popular statistical measure. The utility of the approach is demonstrated in two practical examples: the first is an industry-based example and the second is an M&A example.
Findings: The results of our research suggest that the risk-adjustment approach presented here could become an important part of both performance management and risk management programs.
Practical and research implications: Our approach facilitates the practical risk-adjustment of select performance measures and risk measures. As this is an introductory paper, further research could be conducted on the specifics of the risk-adjustment process as well as the strategic context in which measures are risk-adjusted.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1298128
Joseph Calandro Jr.
University of Connecticut; ACE Group
Scott Lane
Quinnipiac University
Ranganna Dasari
Measuring Business Excellence, Vol. 12, No. 4, pp. 4-12, 2008
Abstract:
Purpose: Risk management has grown increasingly popular in recent years due to the recognition that risk should be as actively managed as performance. A key objective of risk management is to evaluate performance in the context of the relative volatility in which business operations are undertaken. However, accomplishing this has generally proven difficult. In this paper, we present a practical approach for risk-adjusting performance.
Design/methodology/approach: This paper presents a practical risk-adjustment methodology that is based on a popular statistical measure. The utility of the approach is demonstrated in two practical examples: the first is an industry-based example and the second is an M&A example.
Findings: The results of our research suggest that the risk-adjustment approach presented here could become an important part of both performance management and risk management programs.
Practical and research implications: Our approach facilitates the practical risk-adjustment of select performance measures and risk measures. As this is an introductory paper, further research could be conducted on the specifics of the risk-adjustment process as well as the strategic context in which measures are risk-adjusted.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1298128