KPI for the Corporate Risk Management System
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KPI Description Type Category Valuation Optimization
ROI of the Corporate Risk Management System Self-explanatory Financial Quantitative FCF generated by decrease in corporate risks divided by risk management expenses To maximize this KPI, one has to find the amount of risk management expenses (including distribution of these expenses) that maximizes ROI from the Corporate Risk Management System
Completeness of the Corporate Risks List Self-explanatory Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from 0 (no Corporate Risks List) to +10 (perfectly complete Corporate Risks List) To optimize this KPI, one has to develop the most comprehensive (but adequate!) list of corporate risks
Adequacy of the Corporate Risks List Self-explanatory Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from -10 (totally inadequate Corporate Risks List) to +10 (perfectly adequate Corporate Risks List) To optimize this KPI, one has to develop the most comprehensive and adequate list of corporate risks
Competency of Corporate Risk Management Personnel This KPI measures the professional abilities and personal qualities of the corporate employee responsible for corporate risk management  by comparing actual abilities (knowledge and experience) and qualities to the ones required for the most efficient Corporate Risk Management Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from 0 (totally incompetent employee or no employee at all) to 10 (perfectly competent and capable employee) This KPI is maximized by either hiring or transferring the most capable employee (if no employee is currently responsible for Corporate Risk management) or by providing the employee currently responsible for brand  management with the training necessary for achieving the maximum possible performance in Corporate Risk management
Efficiency of Corporate Risk Management Process In essence, this KPI measures financial and operational efficiency of a business process of Corporate Risk Management Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from 0 (no monitoring at all) to 10 (perfectly efficient business process) This KPI is optimized by optimization (re-engineering or engineering 'from scratch') the business process of Corporate Risk Management using the most appropriate in the given circumstances business process engineering/re-engineering methodology
Efficiency of Corporate Risk Management Tools In essence, this KPI measures financial and operational efficiency of tools & methodologies (primarily software, databases and other sources of data) used for Corporate Risk Management Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from 0 (no Corporate Risk Management tools at all) to 10 (perfectly efficient tools) This KPI is optimized by either improving the efficiency of utilization of existing tools (e.g. by providing employees responsible for Corporate Risk Management with adequate training) or by replacing the existing tools with more efficient ones (or by acquiring the most efficient tools if no tools are currently used for Corporate Risk Management)
Adequacy of Potential Damage Assessments Measures the adequacy of assessment of probability of realization of each corporate risk and of potential damage resulting from realization of each corporate risk Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from -10 (totally inadequate assessments) to +10 (perfectly adequate assessments) To optimize this KPI, one has to use the most appropriate and optimal methodologies for assessment of probability of realization of each corporate risk and of potential damage resulting from realization of each corporate risk
Efficiency of Corporate Risk Optimization Procedures Measures the efficiency of optimization procedures for each risk and for the whole system of corporate risks Functional Qualitative This KPI is valued by an outside expert - an external consultant (to eliminate the possible conflict of interests). This KPI is qualitative; therefore, it must be quantified by assigning the numerical score on a scale from -10 (totally inefficient Corporate Risk Optimization Procedures) to +10 (totally efficient Corporate Risk Optimization Procedures)

Efficiency of Corporate Risk Optimization for the whole system of corporate risks is a weighted average of efficiencies of optimization procedures for individual corporate risks

To optimize this KPI, one has to the most appropriate and optimal methodologies for optimizing each corporate risk
Aggregate Competitive Index for the Corporate Risk Management System Aggregate Competitive Index (ACI) measured the aggregate competitiveness of the Corporate Risk Management System compared to its competition, industry and the whole universe of businesses and organizations Functional Qualitative To measure the ACI, one has to compare each component of the Corporate Risk Management System to the best competitor; average among competitors; best in the industry, average in the industry; best overall and average overall To optimize this KPI, one has to make each component of the Corporate Risk Management System best among competitors, in the industry and overall
 Aggregate Efficiency Index for the Corporate Risk Management System Aggregate Efficiency Index (AEI) measures the overall (aggregate) efficiency of the Corporate Risk Management System Functional Quantitative AEI for the whole Corporate Web Site portfolio is the weighted average of all other KPI of the Corporate Risk Management System To maximize AEI, one has to maximize values of individual KPI of the Corporate Risk Management System
KPI Description Type Category Valuation Optimization

 


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