Performance Measures for Risk Management

Performance Measures for Risk Management

Performance measures are essential for monitoring the progress of risk management strategies. For the case of Akawini Copper Company, I would recommend various performance indicators to the management. First, the management should establish a risk management index which assesses the overall risk management performance by developing an achievement level scale. Secondly, they need to identify the number of risks identified over a specific period. A low number of risks detected means the risk management strategies are effective. Thirdly, the management should determine the number of risks that occurs more than once. For the risk management plan to be effective, a specific risk should not occur more than once while there are risk management plans in place. Besides, the management should evaluate the percentage of the risks that have been mitigated. By doing so, the management will have a broad perspective of the risks that are have not been alleviated. Furthermore, the management should evaluate the net profits over a specific period. Effective risk management strategies lower subsequent operational and business costs which in turn increases the net returns.

References

Ivanyos, J., & Sándor-Kriszt, É. (2016). Risk Management Measurement and Evaluation Methods Based on Performance Indicators. Public Finance Quarterly, 61(2), 265.