Developing Key Risk Indicators for B2B International Internet Banking: A RM-BSC Approach

Tseng, S. F., Yu, C. C., and Chiang, C. H. 2011. Developing Key Risk Indicators for B2B International Internet Banking: A RM-BSC Approach. NTU Management Review, 21 (2): 111-156

Shu-Feng Tseng, Associate Professor, Department of MIS, National ChengChi University
Chien-Chih Yu, Professor, Department of MIS, National ChengChi University
Chun-Hao Chiang, Ph. D. Student, Department of MIS, National ChengChi University

Abstract

Business-to-business international internet banking (B2B IIB) has emerged as one of the key drivers in sustaining a bank's competitive advantage and the related risk management issues are getting important. This paper proposes an integrated RM-BSC framework and approach to incorporate key risk factors and then elaborate these risk factors along with the risk management (RM) strategy to establish key risk indicators. The risk factors and their rankings are identified through the two-step Analytical Hierarchy Process (AHP) conducted by surveying the bank representatives who joined the government-sponsored C-plan (TMEA, 2004) to develop B2B IIB. A suggested PDCA approach for periodical assessment and elaboration of key risk factors and its implication for risk management in the dynamic B2B IIB environment are also discussed. The validation of the risk factor associations in the RM-BSC framework were conducted based on the SEM testing with statistical significance. The results exhibit a good convergent validity, an adequate internal consistency, a good discriminating validity, and a proper structural model. The further path analysis identifying the important paths from Learning and Growth perspective to financial perspective might imply the causal-effect relationships along with the Strategy map consisted of the risk factors. 


Keywords

analytic hierarchy process risk management balanced scorecard


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