Fundamentals of Risk Management

FIRM risk scorecard
The four headings of the FIRM risk scorecard offer a classification system for the risks 
to the key dependencies in the organization. The classification system also reflects the 
idea that every organization should be concerned about its finances, infrastructure, 
reputation and marketplace success. In order to give a broader scope to commercial 
success, the headings of the FIRM risk scorecard are as follows:
F Financial;
I Infrastructure;
R Reputational;
M Marketplace.

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Risk assessment
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The features of the FIRM risk scorecard are set out in Table 11.2. Financial and
infrastructure risks are considered to be internal to the organization, while reputa-
tional and marketplace risks are external. Also, financial and marketplace risks can 
be easily quantified in financial terms, whereas infrastructure and reputational risks 
are more difficult to quantify.
The inclusion of reputational risks as a separate category of risk in the FIRM risk 
scorecard is not universally accepted. It is sometimes argued that damage to reputa-
tion is a consequence of other risks materializing and should not be considered as
a separate risk category. However, if a broader view of risk is taken, it becomes obvious 
that reputation is vitally important. This is particularly important when organizations 
are seeking to use their brand name to enter additional markets, or achieve ‘brand 
stretch’ as it is sometimes called.
In any case, there is a wider argument that all risks are a consequence of broader 
business decisions. Adopting a particular strategy, undertaking a project and/or continu-
ing with established operations all involve risks. If the organization did not undertake 
these strategic, tactical or operational activities, risks would not be present.