Project ManagementRisk Management

How to Use Key Risk Indicators

A combination of imagination and good intuition can help predict the future without consulting tarot cards or a DeLorean. This can be a pretty great thing when measures like lag indicators are not cutting it. In a post for the Project Risk Coach, Harry Hall discusses how to use key risk indicators (KRIs) to get a better hold on the future.

Glimpses of the Future

Hall begins by explaining what a key risk indicator is and how it differs from a key performance indicator:

Key risk indicators are metrics used by a project manager to provide an early signal that triggers a review, escalation, or management action (depending on your needs). Where KPIs tell us about historical performance, KRIs help us predict the occurrence of a risk. Project managers who use KRIs can be more proactive.

He gives an example of how KRIs can apply: Suppose that software testing is sticking to its allotted schedule so far, which is great. But also suppose that the number of significant defects found during testing has increased sharply recently. If number of significant defects is a KRI, then a project manager will be able to look at this metric and realize that more testing resources are probably required moving forward to ensure testing continues to stay on schedule.

To create your own KRIs, Hall recommends that you ask yourself three questions:

  1. What are your most significant risks?
  2. Which events or conditions contribute to these risks?
  3. What indicators can you use to measure these events or conditions?

This framework may not be as instantly useful as the DeLorean, but it offers a sturdy starting point. You can view the original post here: http://projectriskcoach.com/2016/08/29/get-ahead-of-your-risks/

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