Which of the following is the MOST important use of KRIs?

A. Providing a backward-looking view on risk events that have occurred

B. Providing an early warning signal

C. Providing an indication of the enterprise's risk appetite and tolerance

D. Enabling the documentation and analysis of trends








 

Suggested Answer: B

Key Risk Indicators are the prime monitoring indicators of the enterprise. KRIs are highly relevant and possess a high probability of predicting or indicating important risk. KRIs help in avoiding excessively large number of risk indicators to manage and report that a large enterprise may have.
As KRIs are the indicators of risk, hence its most important function is to effectively give an early warning signal that a high risk is emerging to enable management to take proactive action before the risk actually becomes a loss.
Incorrect Answers:
A: This is one of the important functions of KRIs which can help management to improve but is not as important as giving early warning.
C: KRIs provide an indication of the enterprise's risk appetite and tolerance through metric setting, but this is not as important as giving early warning.
D: This is not as important as giving early warning.

This question is in CRISC exam 
For getting Risk and Information Systems Control Certificate


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