Fed examiner calls on banks to rethink KRIs

Most banks fail to establish explicit link between KRIs and identified risk exposures

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The link between KRIs and risk exposures is often weak

The key risk indicators (KRIs) banks have developed for operational risk often fail to offer a true picture of the institution’s underlying exposures, a senior US bank examiner has said.

“I wish I had a dime for every time an op risk person was told by a business manager to build a KRI model that just has this needle going up until it gets to a certain point,” Richard Cech, a senior bank examiner for operational risk at the Federal Reserve Bank of New York, said on a panel at the OpRisk North A

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