It is both the Key Risk Indicators(KRI) and Key Performance Indicators(KPI) to be monitored for Operational Performance. Firms have just started realizing the risk of error and risk of fraud as part of managing the operational risk. You may doubt, how KRI will assist in delivering performance.
Risk of Error - Human errors could devastate Operational performance
Risk of Fraud - Systems & Procedures are weak by increasing the probability of fraud.
KRI will augur the understanding whether risk of errors or risk of fraud is contributing more for weak operational performance of the business and the associated risks which can be either easily mitigated by placing controls or can be transferred/rejected. Also acts as early warning signals to the management to alert the problem areas.
Further, the KRI has to be identified in tandem with the business objective and the indicators can be process specific and non - process specific. However, they are to be rational, relevant, record-able.
