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This book presents a theoretical and empirical framework to interpret the possible configurations of the integration between performance management and risk management systems as part of management control systems. The book provides an overview of the development paths of these three systems, outlining the evolution and the current development of these disciplines, highlighting emerging issues and providing some original considerations. The author uses both an inductive and deductive approach in shaping the proposed framework, and includes the perspective of practitioners and academics on the topic. Based on a multiple case study in listed companies and a survey administered to small and medium enterprises, this book provides readers with valuable insights to adapt the proposed framework in different business contexts.



Chapter 1. Introduction to the Book

This manuscript analyzes the integration between performance management and risk management in the context of organizations’ management control system, which is here considered as the ideal context in which this convergence can be realized. Such an integration can help overcome one of the main limitations of today’s risk management practices: the problem of the disconnection between risk management and the decision-making process.
Claudia Presti

Chapter 2. Toward a Contemporary Concept of Management Control

In order to identify how the integration between performance management and risk management could take place in the context of management control systems, it is important to retrace the extensive and diversified literature on management control systems.
The numerous studies that have been published in the last 60 years have extensively examined the different components of these systems, and how they have evolved over time to adapt to changes of the external environment and to changes of organization’s structures and business processes.
Section 2.1 outlines how the different connotations of the term “control” have evolved since the development of the management control system. The progressive attention on performances and the evolution of risk management find their roots in how the mainly accepted connotation of the term “control” have changed over time in the academic realm. Then, the evolution of management control is described following a historical path. Section 2.2 outlines the management control literature’s main trends that led to consider it as a package. Lastly, Sect. 2.2 contains various comments about the expanded boundaries of the management control system as a package, underlying its relationship with the performance management system.
Claudia Presti

Chapter 3. Performance Management as a Part of the Management Control System

Performance and management control are strictly related, as there is no control if there is no measurement of the performance achieved—either in qualitative or quantitative (Thomson (Popular Lectures 1:73, 1883), in his physics studies, affirms thus in relation to the quantitative measurements: “[…]when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be.”) terms—and if there is no consequent comparison with what was established as a goal. In the previous chapter, we explained how the management control system expanded its boundaries, its scope, and its areas of interests. This expansion led to an explosion of studies that analyze a better means of defining, measuring, and managing performances. Consequently, a new evolutionary stage in research on the management control system has started: the era of research on the performance management system.
This chapter starts with a deep reflection on the meaning of the term “performance.” Then, the evolution that led to performance measurement becoming a performance management system is outlined by describing the most important outcome of the performance management system’s evolution. Combining the reflections on the term “performance” and the evolution of the performance management system tools, Sect. 3.3 proposes a clarification of the eventual distinctions, interconnections, and overlaps between performance management, management control, and other relevant systems, highlighting the connections with Chap. 4.
Claudia Presti

Chapter 4. The Development of Risk Management

In order to understand how the current evolutions of the competitive environment affect the management control system, this chapter outlines the evolution of another system that grows within organizations and that has a fundamental connection with the management control system: the risk management system.
Over time, risk management ceased to be just a peripheral technical tool mostly related to insurance and credit management and started to represent an integrated process that involves the entire company. In this new shape, risk management started to have a close, though not yet a well-defined, relationship with the management control system, and particularly with the performance management subsystem. Therefore, it becomes of interest to analyze how risk management has evolved.
Undeniably, the concepts of risk and performance are closely related, as there is always a risk when one tries to achieve a performance, and a performance should be evaluated considering the amount of risk taken [D’Onza (Il sistema di controllo interno nella prospettiva del risk management. Giuffrè editore, 2008)].
This chapter outlines the evolution of the risk management discipline and the subsequent issues, connections, and overlaps with other business systems.
Claudia Presti

Chapter 5. The Integration Between Performance and Risk

As indicated in the Introduction to the book, in order to develop the framework proposed to integrate performance management and risk management systems, we adopted both an inductive and a deductive approach. We therefore started from theory and previous studies, and we adopted a deductive approach to establish the main pillars of the framework (of which a draft is proposed in Sect. 5.2). Subsequently, through an iterative process and following a successive approximations approach, we reshape the framework draft in the light of a multiple case study conducted in six listed companies and propose a conclusive framework. Lastly, in order to extend the framework to unlisted companies, using evidences from a survey conducted in SMEs, we adapt the framework to this specific context as well. Consistently, this chapter represents the empirical part of the study.
Sections 5.1 and 5.2 represent the link between the literature review phase and the empirical phase, as we reassume and use previous studies on this topic to develop new considerations at the basis of the framework’s first draft. In Sects. 5.3 and 5.4, we present the empirical analyses to reshape the first draft and highlight its application in different business contexts.
Claudia Presti

Chapter 6. Conclusions, Implications, and Limitations of the Study

This study undertakes an unconventional integration between performance management, risk management, and management control studies to engage in a pioneering search for the groundbreaking definition of new integrated frameworks, from both an informational and an organizational perspective. In fact, the need for having a single dashboard could not be more actual in the information era. Being able to figure out an integration between different functions, we could benefit from a common base of data (and, consequently, of information) for different scopes, with clear advantages for the decision-making process. An integrated approach could allow companies to overcome the audit approach in favor of a more managerial approach also aimed at exploiting the emerging opportunities.
Claudia Presti


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