├── README.png ├── CITATION.cff ├── examples └── four-broad-categories-of-risk-by-deloitte │ └── index.md ├── README.md └── CODE_OF_CONDUCT.md /README.png: -------------------------------------------------------------------------------- https://raw.githubusercontent.com/joelparkerhenderson/key-risk-indicator/HEAD/README.png -------------------------------------------------------------------------------- /CITATION.cff: -------------------------------------------------------------------------------- 1 | cff-version: 1.2.0 2 | title: Key Risk Indicator (KRI) 3 | message: >- 4 | If you use this work and you want to cite it, 5 | then you can use the metadata from this file. 6 | type: software 7 | authors: 8 | - given-names: Joel Parker 9 | family-names: Henderson 10 | email: joel@joelparkerhenderson.com 11 | affiliation: joelparkerhenderson.com 12 | orcid: 'https://orcid.org/0009-0000-4681-282X' 13 | identifiers: 14 | - type: url 15 | value: 'https://github.com/joelparkerhenderson/key-risk-indicator/' 16 | description: Key Risk Indicator (KRI) 17 | repository-code: 'https://github.com/joelparkerhenderson/key-risk-indicator/' 18 | abstract: >- 19 | Key Risk Indicator (KRI) 20 | license: See license file 21 | -------------------------------------------------------------------------------- /examples/four-broad-categories-of-risk-by-deloitte/index.md: -------------------------------------------------------------------------------- 1 | # Four broad categories of risk 2 | 3 | Credit: [Key Risk Indicators– by Deloitte](https://www.rims.org/annualconference/riskforum2014/Documents/Key%20Risk%20Indicators.pdf) 4 | 5 | 6 | ## Strategic risks 7 | 8 | * Demand shortfalls 9 | 10 | * Customer problems 11 | 12 | * M&A problems 13 | 14 | * Pricing pressures 15 | 16 | * Competition 17 | 18 | * Product/server problems 19 | 20 | * Regulation 21 | 22 | * R&D 23 | 24 | * Management change 25 | 26 | * Corporate governance risk 27 | 28 | * Miscommunications 29 | 30 | * False guidance 31 | 32 | 33 | ## Financial risks 34 | 35 | * Poor financial planning 36 | 37 | * Asset losses 38 | 39 | * Goodwill and amortization issues 40 | 41 | * Liquidity crises 42 | 43 | * High debt 44 | 45 | * Interest rates 46 | 47 | 48 | ## Operational risks 49 | 50 | * Earnings shortfall 51 | 52 | * Cost overruns 53 | 54 | * Poor operating controls 55 | 56 | * Accounting problems 57 | 58 | * Capacity problems 59 | 60 | * Supply-chain issues 61 | 62 | * Employee problems 63 | 64 | * Fraud 65 | 66 | * Noncompliance 67 | 68 | * High input costs 69 | 70 | * IT security 71 | 72 | * Supplier losses 73 | 74 | 75 | ## External risks 76 | 77 | * Declining commodity prices 78 | 79 | * Rating impacts 80 | 81 | * Industry crises 82 | 83 | * Legal risks 84 | 85 | * Weather losses 86 | 87 | * Partner losses 88 | 89 | * Political issues 90 | 91 | * Terrorism 92 | 93 | * Country economic issues 94 | 95 | * Foreign economic issues 96 | -------------------------------------------------------------------------------- /README.md: -------------------------------------------------------------------------------- 1 | 9 | 10 | # Key Risk Indicator (KRI) 11 | 12 | Key Risk Indicator 13 | 14 | A key risk indicator (KRI) is a measure used in management to indicate how risky an activity is. This page is summary excerpts from [Wikipedia / Key risk indicator](https://en.wikipedia.org/wiki/Key_risk_indicator). 15 | 16 | 17 | Contents: 18 | 19 | * [What is a KRI?](#what-is-a-kri) 20 | * [What are KRI examples?](#what-are-kri-examples) 21 | * [What is the best KRI?](#what-is-the-best-kri) 22 | * [How can a KRI help?](#how-can-a-kri-help) 23 | * [What makes a good KRI?](#what-makes-a-good-kri) 24 | * [How to handle KRI?](#how-to-handle-kri) 25 | * [Links](#links) 26 | 27 | 28 | ## What is a KRI? 29 | 30 | 31 | A key risk indicator (KRI) is a measure used in management to indicate how risky an activity is. 32 | 33 | Key risk indicators are metrics used by organizations to provide an early signal of increasing risk exposures in various areas of the enterprise. It differs from a key performance indicator (KPI) in that the latter is meant as a measure of how well something is being done while the former is an indicator of the possibility of future adverse impact. 34 | 35 | KRI give an early warning to identify potential event that may harm continuity of the activity/project. 36 | 37 | KRIs are a mainstay of operational risk analysis. 38 | 39 | 40 | ## What are KRI examples? 41 | 42 | 43 | Key risk indicators for finance: 44 | 45 | * letters of intent (LOI) such as unbooked dollar value ($) 46 | 47 | * value at risk (VaR) such as investment dollar value ($) 48 | 49 | Key risk indicators for marketing: 50 | 51 | * customer complaints (CC) such as incident count (#) for previous N days 52 | 53 | * net detractor score (NDS) such as measured per user cohort 54 | 55 | Key risk indicators for operations: 56 | 57 | * unplanned unavailability (UU) such as incident count (#) for previous N days 58 | 59 | * mean time to recovery (MTTR) such as for the previous N incidents 60 | 61 | Key risk indicators for queues, pipelines, funnels, processes, etc: 62 | 63 | * σ: dropout rate 64 | 65 | * ε: error ratio 66 | 67 | 68 | ## What is the best KRI? 69 | 70 | Organizations have different sizes and environment. 71 | 72 | So every enterprise should choose its own KRI, taking into account the following steps: 73 | 74 | * Consider the different stakeholders of the organization 75 | 76 | * Make a balanced selection of risk indicators, covering performance indicators, lead indicators and trends 77 | 78 | * Ensure that the selected indicators drill down to the root cause of the events 79 | 80 | * Choose high relevant and high probability of predicting important risks: high business impact, easy to measure, high correlation with the risk, and sensitivity. 81 | 82 | * Determine thresholds and triggers for the set of KRI's 83 | 84 | * Locate and fold in data sources that contribute or feed data into KRI triggers 85 | 86 | * Determine notification methods, recipients, and action or response sequences 87 | 88 | 89 | ## How can a KRI help? 90 | 91 | The constant measure of KRI can bring the following benefits to the organization: 92 | 93 | * Provide an early warning: a proactive action can take place 94 | 95 | * Provide a backward looking view on risk events, so lesson can be learned by the past 96 | 97 | * Provide an indication that the risk appetite and tolerance are reached 98 | 99 | * Provide real time actionable intelligence to decision makers and risk managers 100 | 101 | 102 | ## What makes a good KRI? 103 | 104 | Qualities of good key risk indicators: 105 | 106 | * Ability to measure the right thing (e.g., supports the decisions that need to be made) 107 | 108 | * Quantifiable (e.g., damages in dollars of profit loss) 109 | 110 | * Capability to be measured precisely and accurately 111 | 112 | * Ability to be validated against ground truth, and confidence level one has in the assertions made within the framework of the metric 113 | 114 | 115 | ## How to handle KRI? 116 | 117 | Management selects a risk response strategy for specific risks identified and analyzed, which may include: 118 | 119 | * Avoidance: exiting the activities giving rise to risk 120 | 121 | * Reduction: taking action to reduce the likelihood or impact related to the risk 122 | 123 | * Alternative Actions: deciding and considering other feasible steps to minimize risks 124 | 125 | * Share or Insure: transferring or sharing a portion of the risk, to finance it 126 | 127 | * Accept: no action is taken, due to a cost/benefit decision 128 | 129 | Monitoring is typically performed by management as part of its internal control activities, such as review of analytical reports or management committee meetings with relevant experts, to understand how the risk response strategy is working and whether the objectives are being achieved. 130 | 131 | 132 | ## Links 133 | 134 | Wikipedia: 135 | 136 | * [Key risk indicator](https://wikipedia.org/wiki/Key_risk_indicator) 137 | 138 | * [Risk management](https://wikipedia.org/wiki/Risk_management) 139 | 140 | * [Enterprise risk management](https://wikipedia.org/wiki/Enterprise_risk_management) 141 | -------------------------------------------------------------------------------- /CODE_OF_CONDUCT.md: -------------------------------------------------------------------------------- 1 | 2 | # Contributor Covenant Code of Conduct 3 | 4 | ## Our Pledge 5 | 6 | We as members, contributors, and leaders pledge to make participation in our 7 | community a harassment-free experience for everyone, regardless of age, body 8 | size, visible or invisible disability, ethnicity, sex characteristics, gender 9 | identity and expression, level of experience, education, socio-economic status, 10 | nationality, personal appearance, race, caste, color, religion, or sexual 11 | identity and orientation. 12 | 13 | We pledge to act and interact in ways that contribute to an open, welcoming, 14 | diverse, inclusive, and healthy community. 15 | 16 | ## 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