Leading and lagging riskindicators
Posted on January 5, 2019 by Prof Peter Jones
In our book we discuss the concept of “leading” and “lagging” in relation to capacity (pages 192-193). But the concept can be applied in other contexts, such as performance management or risk management – as this Prismarticleillustrates.
To manage risk, key risk indicators (KRIs) need to be monitored. For this to be effective, there should be a balance between leading KRIs (which predict future outcomes) and lagging KRIs (which measure actual outcomes). Examples of leading KRIs would be implementation of training, frequency of risk assessments, and roll out of mitigation initiatives. Examples of lagging KRIs would be number of accidents, number of cyber attacks, or near miss events. The article concludes by looking at the features of effective KRI implementation.
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