Key Risk Indicators selection and reporting for an international institution

A worldwide international institution wanted to upgrade its enterprise risk management practice to the standards of the regulated financial industry. Like many of their peers at the time, they wanted to lead by example and apply to themselves what they preach to others.

The Chief Risk Officer who mandated the mission was positively perceived within the institution. However, risk management was relatively new at the time. So there was quite a lot of preparatory work in terms of information sharing and communication to the departments before the risk team could implement leading KRIs across the organisation.

As the organisation's risk team was quite new, they learned risk management hands-on. They had to implement a quick, practical approach that aligned with their unique culture. This framework also needed to demonstrate early results to senior leadership and the board of directors, as not everyone was convinced by the benefits of enterprise risk management.

In an organisation of this size and type, acceptance is key to a successful implementation. BDO spent some time with the risk team to analyse the roll out of their risk appetite and the early attempts to develop key risk indicators dashboards. The focus centred on understanding their specific challenges, needs, areas of resistance, and identifying potential allies throughout these critical projects.

After meeting a series of supporting departments - including finance, infrastructure, IT and HR - BDO discovered two teams particularly eager to enhance their daily operations with leading risk indicators. These departments recognised the value of a well-designed dashboard and enthusiastically agreed to participate in the pilot project.

BDO collaborated with the HR and IT department first. Working closely together with risk officers and decision-makers from these departments, they proposed a comprehensive list of potential key risk indicators. From this selection, they identified metrics that either already existed within their systems, could be easily collected, or offered meaningful insights to help them grasp their key risks and effectively monitor core activities.

BDO defined thresholds in line with the risk appetite levels of the institution for the related risks and tested the selected metrics over three to six months. Following this successful trial period of dashboard implementation, the key risk indicators were formally adopted throughout the departments.

This project effectively translated the team's existing risk appetite framework into concrete, measurable key risk indicators. It transformed abstract risk limits into practical metrics that departments could implement and monitor.

The pilot initiative with HR and IT proved remarkably successful. The collaborative approach demonstrated significant value: working directly with departments, jointly selecting metrics tailored to their specific needs, and thoroughly testing thresholds and governance structures before full implementation.

This methodology has since been replicated across several other departments within this international institution, consistently delivering successful outcomes.