Integrating Performance Measurement System with Enterprise Risk Management : A Comprehensive Model for Trafigura

Abstract: Background: Trafigura's commercial business analyst alleges that Trafigura misses a comprehensive model and claim for the vital importance in developing one which integrates PMS linked to ERM. PMS could offer overview of financial and non-financial performance through sets of performance indicators to guide the organization's decision-making processes. By other hand ERM could contribute to boosting the consciousness of all sources of risks and decision making throughout the whole organization. Integrating PMS nature and goals connected to ERM into a comprehensive model lacks theoretical contributions.Research Questions: How can a comprehensive model which integrates performance measurement system with enterprise risk management be developed for Trafigura? Purpose: The purpose of this thesis is to suggest and design a comprehensivemodel in which ERM is integrated with PMS for Trafigura in order to improve and support company’s performance and decision making process under an efficient way. The advantages and challenges behind integration are exploitedbased on literature review.Method: The primary data of this thesis are only collected from the interviewee, who is commercial business analyst at Trafigura Chinese office in Shanghai. Thesecondary data are based on Trafigura’s published and unpublished reports. For this thesis is approached the qualitative method with a deductive approach to focusing in integrating ERM with PMS under a comprehensive model for Trafigura.The authors proposed and developed comprehensive model for Trafigura which isdivided in different steps: strategy and firm structure; performance and risk integration; performance measure; risk management; and target setting and evaluation. The authors of this thesis perceived PMS and ERM integration under comprehensive model can provide a holistic perspective for Trafigura. Moreover, the model suggested can contribute to provide better decision-making, creating value and improve efficiency at Trafigura.