financial services industry.
Philadelphia, PA (August 18, 2005)âThe Risk Management Association (RMA)
has published the final report on the KRI Study for Banking, a global
effort to identify and define key risk indicators (KRIs) within the
financial services industry. As announced by RMA at the inaugural KRI
Conference held in New York in January 2005, the KRI Study for Banking has
now been succeeded by KRI Services, a set of KRI-related services offered
by RMA and delivered by RiskBusiness International. A new study focused on
KRIs for Insurance was launched late in 2004.
The report is available only to KRI Services subscribers. It describes the
KRI Framework underlying the KRI Library, the process by which the more
than 1,800 indicators within the Library were identified, ranked, and
specified and the manner in which consolidated operational risk maps were
derived, at both the organizational and individual product level. The
report also contains, for each of the 37 product groups covered, a listing
of the top 20 indicators, based on subscriber usage and deemed
effectiveness in monitoring, measuring, and identifying risk. The KRI
Library is a Web-based repository.
Commenting on the report, Carole Carpentier, senior manager, Operational
Risk at RBC Financial Group, the current chair organization for KRI
Services, said, "The KRI Study is a prime example of RMA advancing the use
of sound risk principles in the financial services industry. As a result of
the KRI Study, financial services companies around the world can now 'speak
KRI' fluently. The underlying framework has given us a common language, but
more useful yet, the framework supports an integrated approach to
enterprise operational risk management (ORM). KRI Services has transformed
the study results into a permanent industry resource. Subscribers to KRI
Services can take the framework, the common language, and the growing
library of indicators to build effective KRI programs that work with and
support their other ORM activities. Subscribers also drive the emergence of
KRI best practices through their participation in the industry working
groups and Benchmarking Services."
Charles Taylor, RMA director of operational risk, said, "KRI Services has
grown since the completion of the KRI Study for Banking. We now have more
than 70 banking subscribers, while 10 insurance firms are already engaged
in the Insurance KRI Study. We are also talking to a number of central
banks, each of which recognizes that it has operational risks of its own
and a need for indicators to monitor and measure exposures. The KRI Study
for Banking proved there is consensus in where financial organizations see
operational exposures, while the KRI Framework is being adopted by a wide
range of firms, not just for KRIs, but also for loss data management, risk
and control assessment, and scenario analysis."
The next major objective for KRI Services is to launch KRI Benchmarking.
"The top 20 ranking of indicators per product area is vital for
benchmarking, as it assists the various working groups in selecting which
indicators they wish to start benchmarking," says Mike Finlay, managing
director at RiskBusiness International. "It also helps individual
subscribers select which indicators they should look at first. We
anticipate our regional working groups to start off benchmarking about 10
to 15 indicators each, with similar volumes for the product-specific
working groups. The number of indicators being benchmarked will then
increase over time."