Whether you love or hate them, it is hard to dispute the popularity of fortune cookies. With more than 3 billion fortune cookies consumed annually around the world, it is clear many people enjoy the mystique of fortune cookies in their reputed ability to predict the future. And everyone wants to know what the future will bring.
This is especially true in the world of risk management, where professionals are dedicated to identifying current and future sources of risk or loss, and eliminating or mitigating such potential loss through the application of controls. In cookie-speak: “Your life will prosper only if you see and acknowledge your faults, and work to reduce them….”
In this process, key risk indicators (KRIs) are metrics or pieces of data serving as early warning signs of areas of increasing risk. In contrast to key performance indicators (KPIs), which are statistics or data points showing what has happened in the past or current time, KRIs portend future trends, losses and opportunities. When designed carefully, organized well, and communicated timely, KRIs are more credible and predictable than a mere theoretical fortune. They are used by risk managers to proactively monitor operational processes, and identify potential business, legal, financial or other environmental risks that may affect the company, long before they can occur.
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