I’m on holidays right now and wrote this in the Qantas Club last week. Earlier this year I wrote some blogs using stories from my holidays. I hope to come back with some more beauties for you.

Three of the stories were about risk appetite. One of the conversations I often have when discussing risk appetite is KRIs. Key Risk Indicators. They are early indicators of performance. In some organisations KRIs are specifically measuring when you are moving outside of defined tolerances for risk-taking.

Guess what. The same things happen with KRIs as KPIs. Because KRIs are lead KPIs. Nothing more really if you are measuring the right things.

The same thing that happens is that we get a proliferation of KRIs, dashboards and risk reports of uncertain value that in some cases drive poor decision making. For example, being outside tolerances can mean audit gets involved when the issue was not such a big one. Or management become more risk-averse unnecessarily.

And my favourite. We have lots of data so let’s grab an analytics tool and develop a whole bunch of “critical” KRIs and when they move out of tolerance let’s send an email to someone. Better still, let’s send it to a whole lot of people. Someone will surely care and take action!

Do you and your organisation a favour. Don’t let this happen or stop it from happening if it sounds like a project on the boil.

Just like KPIs, don’t end up with KRIs that hurt, find KRIs that transform the organisation because of the wonderful insight they provide decision makers. 

Finding them is not always easy. It is sure worthwhile.

You can read more on my thoughts on Risk Appetite here and download my paper, “Risk Appetite: Embed it deeply into your DNA” from there. If you are interested in having a conversation on how to bring value to an organisation through a risk appetite statement, please come join me and a group of other risk professionals at my group mentoring program that starts on Friday, 15th March 2019 in-person and streamed online.

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