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PRMIA Exam 8020 Topic 2 Question 2 Discussion
Topic #: 2
In order for a KRI to be effective it must be:
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
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