Example of a Key Indicator
Key indicators are metrics used by organizations to provide an early warning of increasing risk exposures in various areas of the enterprise.Below is an example of a Key indicator. It illustrates how key indicators are used as well as their characteristics.
A key indicator monitors the annual turnover of a legal entity. The objective is set to 12 million (€).
The KRI shall monitor the monthly turnover in order to ensure that the appropriate measures are taken if things do not go as expected.
It has been decided that the monthly turnover should always be between 900k and 1.1 million €. The KRI value is measured twice a month, which means the key indicator values entered each month are summed up to obtain the monthly turnover.
In this example the different characteristics described in HOPEX are as follows:
• Lower Threshold: 900k
• Higher Threshold: 1.1 million
• Category: Standard (all values above the higher threshold are considered to be good)
• Aggregation period: monthly
• Aggregation method: sum
• Statuses for the monthly turnover:
• Operational - If higher than 1.1 million (higher threshold).
• Warning – If between 800k and 900k
• Unsatisfactory – If between 650k and 800k
• Critical – If between 500k and 650k
• Failed – If lower than 500k