Mastering Risk Management

LINKS BETWEEN RISKS, CONTROLS, KRIs AND KCIs

It is common to identify a considerable number of indicators for each key risk. The challenge is to find a small number of indicators which convey information that is useful to the business, preferably using existing management information. Ideally, there will be one or two indicators for the likelihood and impact of a key risk and one indicator for each control which mitigates the key risk. In this way it is possible to achieve a manageable number of indicators which will give a good picture of the current risk profile of the firm, such as the one given in Figure 7.4.

Figure 7.4 Examples of risks, KRIs, controls and KCIs