To ensure that bank workers consider key risk indicators in their decisions and actions, the most critical KRI-related data must be made available to employees and decision-makers. Banks can choose whether to track KRIs manually or use an automated system.

KRI Tracking on Manual Basis

Many banks that manage KRIs manually use spreadsheets to track and disseminate the most recent risk data; however, taking a manual approach has its disadvantages. The most obvious is that it relies on the vigilance and accountability of the personnel who oversee keeping an up-to-date list of essential risk indicators on hand. Due to manual errors, the process can generate inconsistent or incorrect data, which can lead to the bank making an incorrect choice due to their risk management system incorrectly assessing the severity or likelihood of developing risk.

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When it comes to a manual technique, visibility and intuitiveness are also important considerations. Sending an email to all employees with a spreadsheet containing risk metrics runs the risk of some employees not reading the emails or forgetting to include some crucial information. It is important to remember that while these issues may appear insignificant from a theoretical standpoint, and that asking employees to be diligent should suffice, it is precisely these types of oversights that modern risk management technologies eliminate. Exercising caution when implementing a risk mitigation approach that is itself a risk can have unintended consequences.

From anticipating and exploiting new risks and opportunities, the most significant drawback of manual KRI management is that it does not allow for any risk management automation. All analysis must be done manually, including bringing in data from external sources such as leading indicators and other sources of information.

Technological Solutions for Dedicated Risk Prediction

The development of risk technology has made it possible to implement various advanced techniques for risk automation, reporting, and accountability. To identify developing dangers, banks might procure risk prediction systems meant to track critical key risk indicators (KRIs) and map them with associated risks, controls, and other related data. These tools also enable risk executives to select the most important metrics and combine them with external data from peers and other sources to obtain a complete picture of their risk profiles. These metrics can then be imported automatically from reliable sources or parsed directly from official reports and documents.

Many banks that manage KRIs manually use spreadsheets to track & disseminate the most recent risk data; however, taking a manual approach has its disadvantages. Click To Tweet

Risk prediction systems provide comprehensive KRI tracking tools and an easy visual representation of risk metrics. Rather than depending on emails or spreadsheets, bank stakeholders may now access real-time updates on selected critical risk indicators via a cloud-based risk prediction tool on any device with an internet connection. Risk managers can utilize the tool to directly offer evaluations and historical movement of the most critical risk measures. Additionally, banks can define their risk appetite and limit the allowed ranges of risk measures within the platform. If a KRI exceeds the bank-defined restrictions, the allocated stakeholders get notifications automatically.

If a bank already has a risk management solution in place, the implementation team can directly incorporate the data from the pre-existing solution. While integrating new tools with legacy solutions may require a specialized integration solution, many current solutions include built-in APIs (application programming interfaces) and other data sharing mechanisms.

Platforms for Risk Management

By implementing a risk management platform, a bank gains all the advantages of a risk prediction tool while also strengthening its risk prediction capabilities. Such a platform may combine risk forecasting easily with all other aspects of risk management. Additionally, banks can mix internal and external data to improve risk assessments and forecasting. Dashboards can show KRI data alongside other risk data, which helps normalize the practice of incorporating KRIs into decision-making across the business. Additionally, risk management platforms provide risk mapping, a critical tool for forecasting and assessing risks.

Mapping of Risks

The value of a risk prediction is directly proportional to the intelligence it can supply an organization. Banks must comprehend new risks to analyze the risk’s impact on the bank’s various business segments. Risk mapping is the missing piece of the puzzle because it integrates risk measures with an awareness of how risks interact with various activities within the bank’s various units. Risk maps are the foundation of the process – a digital record of the relationships between risks, controls, documents, reports, and bank business units.

Enterprise Risk Management Software

Interested in seeing how modern risk management platforms can use risk mapping and risk predictions to help your organization? Get in touch with our risk experts to demo the American Bankers Endorsed risk management solution Predict360.