Which of the following terms is described in the statement below?
“They are the prime monitoring indicators of the enterprise, and are highly relevant and possess a
high probability of predicting or indicating important risk. “
A.
Key risk indicators
B.
Lag indicators
C.
Lead indicators
D.
Risk indicators
Explanation:
Key Risk Indicators are the prime monitoring indicators of the enterprise. KRIs are highly relevant
and possess a high probability of predicting or indicating important risk. KRIs help in avoiding
excessively large number of risk indicators to manage and report that a large enterprise may have.
Answer D is incorrect. Risk indicators are metrics used to indicate risk thresholds, i.e., it gives
indication when a risk level is approaching a high or unacceptable level of risk. The main objective
of a risk indicator is to ensure tracking and reporting mechanisms that alert staff about the
potential risks.
Answer C is incorrect. Lead indicators are the risk indicators that is used to indicate which
capabilities are in place to prevent events from occurring.
Answer B is incorrect. Lag indicators are the risk indicators that is used to indicate risk after events
have occurred.
A