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Key Risk Indicator

Key Risk Indicators (KRIs) are measures used in risk management to indicate how risky an activity is. Unlike key performance indicators, KRIs focus on potential future adverse impacts rather than current performance. KRIs provide early warnings of events that could harm business continuity. They benefit organizations by enabling proactive responses, retrospective risk analysis, and real-time risk intelligence for decision makers. Advances in data technology now allow KRIs to be calculated across multiple sources in real time.

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194 views

Key Risk Indicator

Key Risk Indicators (KRIs) are measures used in risk management to indicate how risky an activity is. Unlike key performance indicators, KRIs focus on potential future adverse impacts rather than current performance. KRIs provide early warnings of events that could harm business continuity. They benefit organizations by enabling proactive responses, retrospective risk analysis, and real-time risk intelligence for decision makers. Advances in data technology now allow KRIs to be calculated across multiple sources in real time.

Uploaded by

Luis Malaver
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Key Risk Indicator

This article is about the measure used in management. • High business impact
For the Ruby Implementation, see YARV. For other • Easy to measure
uses, see KRI.
• With high correlation with the risk

A Key Risk Indicator, also known as a KRI, is a mea- • Sensitivity


sure used in management to indicate how risky an activity • Determine thresholds and triggers for the set of
is. It differs from a Key Performance Indicator (KPI) in KRI’s
that the latter is meant as a measure of how well some-
thing is being done while the former is an indicator of the • Locate and fold in data sources that contribute or
possibility of future adverse impact. KRI give an early feed data into KRI triggers
warning to identify potential event that may harm conti-
nuity of the activity/project. • Determine notification methods, recipients, and ac-
tion or response sequences
KRIs are a mainstay of operational risk analysis.
The constant measure of KRI can bring the following
benefits to the organization:
1 Definitions
• Provide an early warning: a proactive action can take
According to OECD [1] place

A risk indicator is an indicator that estimates the • Provide a backward looking view on risk events, so
potential for some form of resource degradation lesson can be learned by the past
using mathematical formulas or models. • Provide an indication that the risk appetite and tol-
erance are reached

2 Risk management • Provide real time actionable intelligence to decision


makers and risk managers

2.1 Security risk management


Advances in hosted cloud data storage, data federation,
[2] and data aggregation have enabled data supply chains for
According to Risk IT framework by ISACA, key risk
real time calculation of key risk indicators across hereto-
indicators are metrics capable of showing that the organi-
fore unlinked or disconnected data sources. Risk level
zation is subject or has a high probability of being subject
dashboards can be supplemented with real time push no-
to a risk that exceed the defined risk appetite.
tifications of risk. Systems methods and tools addressing
Organizations have different sizes and environment. So triggering of notifications when targets are attained for
every enterprise should choose its own KRI, taking into key risk indicators have been evolving. Calculating and
account the following steps: enabling notifications of key risk indicators used to be a
unique benefit of enterprise software packages. With the
• Consider the different stakeholders of the organiza- evolution of API’s to calculate trigger values for key risk
tion indicators across various data sources, the potential for
risk managers to include data external to an enterprise or
• Make a balanced selection of risk indicators, cov- external to an enterprise database has changed the risk
ering performance indicators, lead indicators and management landscape.
trends

• Ensure that the selected indicators drill down to the


root cause of the events
3 See also
• Choose high relevant and high probability of pre- • Committee of Sponsoring Organizations of the
dicting important risks: Treadway Commission

1
2 4 REFERENCES

• Enterprise risk management

• ISACA
• ISO 31000

• Operational risk
• Performance indicator

• Risk appetite
• Risk IT

4 References
[1] OECD Glossary of statistical terms

[2] ISACA THE RISK IT FRAMEWORK (registration re-


quired)
3

5 Text and image sources, contributors, and licenses


5.1 Text
• Key Risk Indicator Source: https://en.wikipedia.org/wiki/Key_Risk_Indicator?oldid=726820997 Contributors: Bearcat, Vfp15, Stesmo,
GregorB, Nihiltres, Chobot, Kuru, Alaibot, Hervegirod, Nick Number, R'n'B, Isitigiti, Jorgemata, Beeblebrox, Addbot, Yobot, EmausBot,
John of Reading, Pastore Italy and Anonymous: 9

5.2 Images
• File:Business_template.svg Source: https://upload.wikimedia.org/wikipedia/commons/e/ed/Business_template.svg License: CC BY-SA
3.0 Contributors:
• Business-commerce.svg Original artist:
• DarKobra from Deviantart

5.3 Content license


• Creative Commons Attribution-Share Alike 3.0

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