When selecting key risk indicators (KRIs) to monitor risk trends over time, the most important consideration is:
A. Ability to predict trends
The primary purpose of KRIs is to serve as an early warning system, providing indications of potential changes in risk exposure. KRIs should be predictive in nature, allowing organizations to foresee and respond to risk trends before they materialize into significant issues. The ability of KRIs to effectively predict trends in the risk landscape is crucial for proactive risk management and decision-making.
A. Ability to predict trends
The MOST important consideration when selecting key risk indicators (KRIs) to monitor risk trends over time is "A. Ability to predict trends." KRIs are designed to provide early warnings and insights into potential risk trends. The ability of a KRI to predict trends in advance enables organizations to take proactive actions to mitigate emerging risks and capitalize on opportunities.
While the other options (B. Ongoing availability of data, C. Availability of automated reporting systems, D. Ability to aggregate data) are relevant factors for effective risk monitoring and reporting, the primary purpose of KRIs is to provide predictive value, which makes the ability to predict trends the most critical consideration in their selection.
A. Ability to predict trends
Key Risk Indicators (KRIs) are meant to provide an early signal of increasing risk exposure in various areas of the enterprise. Hence, the ability to predict trends is the most important consideration when selecting KRIs. They should enable proactive management and prompt appropriate actions before risks become problems.
From the 7th CRISC manual, selecting an appropriate set of KRIs benefits the organization by allowing 'trend analysis and documentation', among others.
Sorry, best 'D':
The ability to aggregate data is the most important consideration when selecting key risk indicators (KRIs) to monitor risk trends over time. KRIs are used to track and monitor the performance of key risk drivers that have a significant impact on an organization's ability to achieve its objectives. To be effective, KRIs should be capable of being measured consistently over time and across different business units, and the data should be easily aggregated and analyzed to identify trends and patterns that may signal emerging risks. By selecting KRIs that can be easily aggregated and monitored, organizations can quickly identify and respond to changing risk conditions, and take corrective action to prevent or mitigate negative impacts.
Pg173 CRM 6th ed
4.1.1 KRI Selection
KRIs should be selected carefully and sparingly. Common mistakes made when implementing KRIs
include regarding too many risk indicators as being KRIs and choosing KRIs that are flawed in some way.
These include those KRIs that:
• Are not linked to specific risk
• Are incomplete or inaccurate due to unclear specifications
• Are difficult to measure, aggregate, compare and interpret
• Provide results that cannot be compared over time
• Are not linked to goals
A is definitely not the correct answer. Selecting risks to MONITOR risk trends over time means that the trend is already known and does not need to be predicted.
Reposting because of typo...
Why not C - Root Cause Analysis as the question suggests it has exceeded but it was okay before?
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