Key risk indicators (KRIs) are metrics or measures that provide information on the current or potential exposure and performance of an organization in relation to specific risks. KRIs can help to monitor and track the changes or trends in the risk level and the risk response over time, identify and alert the risk issues or events that require attention or action, evaluate and report the effectiveness and efficiency of the risk management processes and practices, and support and inform the risk decision making and improvement1.
The best way to enable the identification of trends in risk levels is to ensure that the correlation between risk levels and KRIs is positive, because it means that the KRIs are aligned with andreflective of the risk levels, and that they can capture and indicate the variations or movements in the risk levels accurately and reliably. A positive correlation between risk levels and KRIs can be achieved by:
Selecting and defining the KRIs that are relevant and appropriate for the specific risks that the organization faces, and that are consistent and comparable across different domains and contexts
Collecting and analyzing the data and information that are reliable and sufficient for the KRIs, and that are sourced from various methods and sources, such as risk assessments, audits, monitoring, alerts, or incidents
Applying and using the tools and techniques that are suitable and feasible for the KRIs, such as risk matrices, risk registers, risk indicators, or risk models
Reviewing and updating the KRIs periodically or as needed, and ensuring that they reflect the current or accurate risk levels, which may change over time or due to external factors23
The other options are not the best ways to enable the identification of trends in risk levels, but rather some of the factors or aspects of KRIs. Measurements for KRIs are repeatable is a factor that can enhance the reliability and validity of the KRIs, as it means that the KRIs can produce the same or similar results under the same or similar conditions. However, repeatability does not necessarily imply accuracy or sensitivity, and it may not capture or reflect the changes or trends in the risk levels. Quantitative measurements are used for KRIs is an aspect that can improve the objectivity and precision of the KRIs, as it means that the KRIs are expressed in numerical or measurable values, such as percentages, probabilities, or monetary amounts. However, quantitative measurements may not be suitable or feasible for all types of risks or KRIs, and they may not capture or reflect the complexity or uncertainty of the risk levels. Qualitative definitions for KRIs are used is an aspect that can enhance the understanding and communication of the KRIs, as it means that the KRIs are expressed in descriptive or subjective terms, such as high, medium, or low, based on criteria such as likelihood, impact, or severity. However, qualitative definitions may not be consistent or comparable across different risks or KRIs, and they may not capture or reflect the magnitude or variation of the risk levels. References =
Key Risk Indicators: What They Are and How to Use Them
Key Risk Indicators: A Practical Guide | SafetyCulture
Key Risk Indicators: Types and Examples
[CRISC Review Manual, 7th Edition]
