Without having the ability to effectively measure risk, it will not be possible for the management team to properly assess whether their risk management strategy is either appropriate or cost-effective.
Risk metrics enable management to appreciate the extent to which risk is being effectively managed within the organization and if there are arising risks that need to be considered. To build an effective risk management framework, it is important to commence by working on establishing data availability and accuracy. Without adequate data, the company will be guessing what the position might be and this may or may not be reliable.
Risk metrics fall into a series of classes, including the following:
- Metrics that enable management ...