The prevailing literature on Key Risk Indicators has
largely focused on what are commonly referred to as
Generic Indicators, which are indices that track and
measure risk items such as operational losses, policy
exceptions, unresolved audit issues, etc. While generic
indicators are generally acknowledged as a useful risk
management tool, they offer no more than a broad
coverage of operational risks. It has also been pointed
out that generic indicators merely identify risk on an
after-the-fact basis. The key to proactive operational
risk management lies in ‘Business Process-specific Key
operational Risk Indicators’ (BP KRIs), where the risk
identification efforts focus on the idiosyncratic
business risks of functional processes. The purpose is
to identify potential high-risk hotspots and to
anticipate a potential problem before it occurs. A
review of contemporary literature, however, indicates
limited discussion on the concepts underpinning BP KRIs.
Part one of this article reviews the general
applications and the fundamental concepts underpinning
the development of BP KRIs. pdf
