Risk management maturity level is the degree to which an organization has developed and implemented a systematic and proactive approach to managing the risks that it faces across its various functions, processes, and activities. Risk management maturity level reflects the organization's risk culture and capability, and its alignment with its objectives and strategies1.
The best measurement of an organization's risk management maturity level is the key risk indicators (KRIs), which are metrics or measures that provide information on the current or potential exposure and performance of the organization in relation to specific risks. KRIs can help to:
* Monitor and track the changes or trends in the risk level and the risk response over time
* Identify and alert the risk issues or events that require attention or action
* Evaluate and report the effectiveness and efficiency of the risk management processes and practices
* Support and inform the risk decision making and improvement23
KRIs can be classified into different types, such as:
* Leading KRIs, which are forward-looking and predictive, and indicate the likelihood or probability of a risk event occurring in the future
* Lagging KRIs, which are backward-looking and descriptive, and indicate the impact or consequence of a risk event that has already occurred
* Quantitative KRIs, which are numerical or measurable, and indicate the magnitude or severity of a risk event or outcome
* Qualitative KRIs, which are descriptive or subjective, and indicate the nature or characteristics of a risk event or outcome4 The other options are not the best measurements of an organization's risk management maturity level, but rather some of the factors or outcomes of it. Level of residual risk is the level of risk that remains after the risk response has been implemented. Level of residual risk reflects the effectiveness and efficiency of the risk response, and the need for further action or monitoring. The results of a gap analysis are the differences between the current and the desired state of the risk management processes and practices. The results of a gap analysis reflect the completeness and coverage of the risk management activities, and the areas for improvement or enhancement. IT alignment to business objectives is the extent to which IT supports and enables the achievement of the organization's goals and strategies. IT alignment to business objectives reflects the integration and coordination of the IT and business functions, and the optimization of the IT value and performance. References =
* Risk Maturity Assessment Explained | Risk Maturity Model
* Key Risk Indicators - ISACA
* Key Risk Indicators: What They Are and How to Use Them
* Key Risk Indicators: Types and Examples
* [CRISC Review Manual, 7th Edition]