Key Risk Indicators/ Risk Reporting Flashcards
what are key risk indicators?
metrics used to monitor the level of exposure to risks and the effectiveness of controls within an organization
what are the categories of KRIs?
- exposure indicators
- stress indicators
- failure indicators
- casual indicators
what are the roles of KRIs?
- Monitor risk-taking and the potential impacts of risk events on the organization
-Translate risk appetite, defined at board level and possibly also at the operational/ business unit level
what are roles of KRIs?
- risk monitoring
- giving assurance to the board
what are the features of effective KRIs?
- early warning devices
- risk specific (rather than general)
- business relevant
- data driven
- owned by business units
what are the steps in the implementation of KRIs?
- identification of relevant metrics
- setting of thresholds
- assigning responsibilities
- regular reviews and updates
what are the challenges of using KRIs?
- data availability
- threshold setting
- integration
- continuous improvement
what are the benefits of effective KRI programs?
- proactive risk management
- enhanced decision- making
- regulatory compliance
- improved operational resilience
what risk reporting?
the process of communication information about the risk environment, risk exposure and risk management activities to stakeholders
what are the golden rules of risk reporting?
- value of the report must exceed the cost of collecting and reporting information
- clear purpose of the reporting which helps to strategically influence decision- making
what is the typical content of risk reporting?
- incident reporting
- top risks
- KRIs and issue monitoring
- risk appetite KRIs
- emerging risks/horizon scanning
- action plans and follow-ups
what are challenges in risk reporting?
- ensuring there in a balance in the information collected/reported
- filtration of the risks and type to different levels of management
- effective reporting to summarize details
what are best practices in risk reporting?
- clear taxonomy to categorise and report risk
- focus on effectiveness of controls
- keep reporting on need-to-know basis
what is the difference between risk monitoring and risk reporting?
monitoring is the continuous tracking of metrics and control effectiveness. reporting is the escalation of significant issues and summary of data to higher management
what are the metrics to report on conduct?
- employee behavior and compliance
- missed training, disciplinary actions and compliance breaches
