Key Risk Indicators (KRI Library)

Little is known when it comes to Key Risk Indicators. The power of KRI remains only in the name. Companies today are not benefiting from immense power of KRI and how can they can make or break an organisation's growth strategy.

KRI are simple quantitative metrics that help companies to track their risk events and help business managers to take the right decisions. We all know what information a PAT, EPS, P/E multiple provides us. Or for that matter, even ratios like leverage ratio, Liquidity ratio are very powerful tools.

Well, here comes KRI. These go beyond the business performance and provide insight into the operations of the company.

Take for example a KRI - Number of cash sales to credit sales ratio for a company that has large value sales. It seems like a simple ratio that just tracks how many customers are buying in cash versus credit sales. But when linked to risks, it gives a different perspective all together. The higher the ratio, the more the concern for frauds relating to fictitious sales, misppppropriation of cash, mis handling of cash, process lapses when banking cash, additional procedures and checks required to manage cash sales etc. If possible and the situation permits, the company would want to reduce cash sales to prevent various risk events.

As the example above, there are many such KRI that can be structured for companies to better manage their risks. It is time consuming, but extremely rewarding.


Download KRI Library Proposal.

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