Mastering Risk Management

SUMMARY

Indicators are valuable not only in monitoring business performance, but in identifying changes in a firm’s risk environment and in the effectiveness of risk controls. They are a fundamental part of the risk management process and an essential part of monitoring quantitative risk appetite.

The important thing to remember is that a KRI is an indicator of a key risk and a KCI an indicator of a control which relates to a key risk. If that is understood, the number of indicators will be manageable and the business will see them as valuable, thus helping to achieve buy-in for the whole risk management process. Another tip to encourage buy-in is to use, as far as possible, indicators which are already being used by the business. Inventing ...