Which indicator is a subset of risk indicators that are highly relevant and possess a high probability of predicting important risk?

Which indicator is a subset of risk indicators that are highly relevant and possess a high probability of predicting important risk?

• A. KPI
• B. KRI
• C. Lag risk indicator
• D. Business case

Answer: (B)

Key Risk Indicators (KRIs) are the metrics used to flag potential risk exposure before an event occurs. They are chosen because they are highly relevant to the organization’s risk profile and have a strong likelihood of signaling important risk in time to take action. KRIs function as early warning signs, guiding risk owners to escalate, adjust controls, or alter plans before damage happens. By contrast, KPIs track how well things are performing, which isn’t the same as signaling risk, and lag risk indicators look backward at what already happened rather than predicting what might come next. A business case is not a risk signal at all; it’s a document used to justify a decision or project. So the indicator described is the Key Risk Indicator, designed to foresee and quantify risk in a timely way.

Key Risk Indicators (KRIs) are the metrics used to flag potential risk exposure before an event occurs. They are chosen because they are highly relevant to the organization’s risk profile and have a strong likelihood of signaling important risk in time to take action. KRIs function as early warning signs, guiding risk owners to escalate, adjust controls, or alter plans before damage happens.

By contrast, KPIs track how well things are performing, which isn’t the same as signaling risk, and lag risk indicators look backward at what already happened rather than predicting what might come next. A business case is not a risk signal at all; it’s a document used to justify a decision or project.

So the indicator described is the Key Risk Indicator, designed to foresee and quantify risk in a timely way.