PRMIA Exam 8020 Topic 8 Question 9 Discussion

Definition of an Effective Key Risk Indicator (KRI)

A KRI is a metric used to identify, measure, and monitor emerging risks.

To be effective, KRIs must be both quantitative and qualitative, allowing for a comprehensive risk view.

Key Characteristics of Effective KRIs

Quantitative -- Uses numerical data for trend analysis.

Qualitative -- Incorporates expert judgment and scenario-based insights.

Consistent -- Maintains uniform definitions across reporting periods.

Efficient & Repeatable -- Must be easily measured and consistently reported.

Why Other Answers Are Incorrect

Option

Explanation

B . Qualitative, Consistent, Efficient & Repeatable.

Incorrect -- Excludes quantitative aspects, which are essential for KRIs.

C . Quantitative, Consistent, Comparable, Efficient & Repeatable.

Incorrect -- While comparison is useful, qualitative factors are missing, making this answer incomplete.

D . Quantitative, Repeatable and Efficient.

Incorrect -- Lacks qualitative insights and consistency as key factors for KRIs.

PRMIA Reference for Verification

PRMIA Risk Indicator Guidelines

Basel Committee's Principles on Risk Data and KRI