KRIs That All Community Banks Should Be Watching

Key risk indicators are measurable tools that allow banks to manage risk. But they can often be difficult to pin down. Join Dan Zitting, chief product officer at ACL, for a discussion at the Annual Risk Management Conference that will help you choose the most appropriate KRIs for your bank.

What makes a KRI effective?

Effective key risk indicators (KRIs) are an extremely important part of risk management. They provide metrics which signal to management the increasing risk exposure and trends that impact an organization.

When creating KRIs, organizations identify a risk event and evaluate the possible causes as well as ways to prevent the risk event from occurring. They also look at the consequences of the risk event: What would take place if this risk event were to happen? What measurements does the organization have in place to minimize the damage?

In order to be effective, KRIs must be quantifiable, predictive, and informational, and they should drive material value throughout the organization. They must measure the right things in order to support business decisions. That’s often where the first big challenge appears: selecting the most useful KRIs for your organization.

Uncovering and managing predictive KRIs

On November 14th at the Annual Risk Management Conference, Dan Zitting, chief product officer at ACL, will be sharing ways that you can ensure the KRIs you select have predictive value—that they actually provide your management team with those early warning signals.

He’ll also be discussing how to create a methodology for building a formalized KRI program, including how to define the desired outcomes of your program and how to get all of your different business units aligned with your plan.

Finally, he’ll dive into the differences between KPIs and KRIs, how they relate, and how to leverage technology to take action when your metrics move in an unfavorable direction. 

Learning objectives

This discussion will focus on sharing experiences and case studies in defining processes to identify and manage KRIs that matter—as well as ways to enable a KRI/KPI program success through technology.

Anyone attending the session will:

●     Learn a process methodology for starting a formalized KRI/KPI program, defining desired outcomes, and building internal support.

●     Learn the difference KPIs and KRIs, how they relate, and how to ensure that KRIs have predictive value.

●     Understand a starter set of both strategic and operational KRIs that many banks have actually found effective.

●     Discover how to properly watch KRIs and ensure timely action is taken through automation.

Learn more about KRIs and KPIs in Dan’s session on November 14th during the Retail/CB track (11 a.m.), “KRIs That All Community Banks Should Be Watching” at the RMA Annual Risk Management Conference.

Additional resources:

On-demand webinar: Recognizing and Managing Emerging Strategic Risks

Daniel Clark, director of internal audit at Washington Trust Bank shares how he integrates strategic risk management into business decision-making and execution for a decisive advantage.

White paper: Uncovering Top Banking Risks

To get a better understanding of the risks banks are focused on, this white paper examines the publicly available Form 10-K filings of the eight largest banks from the S&P 500 to find out what’s topping their list of risks.

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