Risk and Insurance Management Society (RIMS) Certified Risk Management Professional (CRMP) Practice Exam

Which indicator provides a quantitative measure of the performance against expected outcomes?

1. Key risk indicator (KRI)

2. Organizational resilience

3. Key performance indicator (KPI)

4. Risk appetite

The correct answer is: Key performance indicator (KPI)

The correct choice is Key Performance Indicator (KPI). A KPI is specifically designed to quantitatively measure how effectively an organization is achieving its key business objectives. It provides a clear and measurable goal against which performance can be assessed and compared to expected outcomes. KPIs can reflect various aspects of an organization's operation, such as financial performance, customer satisfaction, and operational efficiency. By identifying and using KPIs, organizations can ensure that they are on track to meet their goals, allowing for a data-driven approach to management and decision-making. This quantitative aspect allows organizations to make informed adjustments based on their performance against these indicators. In contrast, the other options address different aspects of risk and performance management but do not focus specifically on quantitative measures of performance against expected outcomes. Key risk indicators (KRIs) serve to measure exposure to risk rather than to directly gauge performance against goals. Organizational resilience speaks to an organization's ability to adapt and recover from challenges, while risk appetite reflects the level of risk an organization is willing to accept. Neither of these directly provides a quantitative measure of performance outcomes like KPIs do.