An integrated perspective for balancing performance and risk

Over the last century, management disciplines have struggled to define the concept of performance. From early manufacturing origins, performance was defined using quantities such as efficiencies and productivities, while later advancing to shareholder value concerns. With increased regulation, aspects of safety and risk took a preeminent and complementary role in organizational management. This left aspects of reliability and safety to be concurrently managed in the realms of both performance and risk, while the performance and risk fields diverged to parallel and continuously maturing academic disciplines. Today, performance and risk disciplines involve broad applications within operations management, but also in areas of policy, sustainability and social responsibility. As a result, there are strong arguments for challenging the boundaries between performance and risk. This paper provides an academic inquiry for the evolving definition of performance and how it can be reconciled with concepts of risk, uncertainty, and opportunity within the context of public and private sector management. Using recent developments in the risk analysis field, we develop a unified perspective for how to think in relation to performance and risk, from fundamental concepts to characterizations, assessments and management. A case example involving three types of systems illustrates the contribution of this paper.