Risk-integrated performance budgeting in insurance: a systems framework for strategic resource allocation under regulatory constraints

Purpose Financial services organizations face increasing pressure to optimize resource allocation while managing complex regulatory requirements and stakeholder expectations. Traditional budgeting approaches prove inadequate for organizations operating with temporal revenue-cost mismatches and sophisticated risk portfolios. This research develops a comprehensive performance-based budgeting framework tailored to risk-centric financial services organizations. Design/methodology/approach Sequential mixed-methods design integrates systematic literature review (SLR) with fuzzy cognitive mapping (FCM). SLR follows PRISMA 2020 guidelines, analyzing 33 studies from multiple databases. FCM employs 16 expert participants across actuarial, financial and regulatory domains. The CONCOR algorithm identifies structural equivalence, creating block models representing system architecture. Findings The framework comprises 12 interconnected subsystems organized into seven structural blocks that integrate strategic planning, performance measurement and resource allocation processes. Risk Management demonstrates the highest centrality, influencing all other system components. The framework establishes systematic linkages between financial planning, capital allocation and performance monitoring while accommodating regulatory compliance requirements. Block modeling reveals hierarchical relationships that support both operational efficiency and strategic decision-making. Research limitations/implications Framework developed for insurance operations; adaptation required for specific organizational contexts and regulatory environments across different insurance sectors. Practical implications Financial managers can implement systematic transformation from traditional to performance-oriented budgeting. The framework provides structured guidance for integrating financial planning with risk management, enabling data-driven decision-making, balancing efficiency with regulatory compliance. Originality/value First comprehensive performance-based budgeting framework specifically designed for risk-centric financial services. The systems approach integrates strategic planning, risk management and performance measurement, providing a robust empirical foundation for practical implementation.