What are some of the properties of Bottom-Up KRIs?

Definition of Bottom-Up KRIs

Bottom-Up Key Risk Indicators (KRIs) are identified at the operational level, focusing on localized

risks within business units.

They are tied to actual internal loss events and reported frequently (daily, weekly, or monthly) to

capture ongoing trends.

Key Properties of Bottom-Up KRIs

Selected by local management → Ensures relevance to specific business areas.

Tied to internal loss events → Helps in tracking risk patterns within specific legal entities, countries,

or business units.

Reported frequently → Allows for timely risk detection and mitigation.

Why Answer D is Correct

Bottom-up KRIs focus on localized risk exposure and are monitored frequently to track operational

changes.

Why Other Answers Are Incorrect

Option

Explanation

A . Seated by senior management: tied to internal

loss events at the legal entity, country, business,

and/or product level, reported daily, weekly, or

monthly.

Incorrect – Senior management sets top-down

KRIs, while bottom-up KRIs are managed locally.

Incorrect – While audit reports are useful,

bottom-up KRIs are based on loss events, not just

audit findings. Quarterly reporting is too

infrequent.

B . Selected by local management, based on key

controls or weaknesses identified by audit reports,

reported quarterly.

C . Are not used due to changes in regulations.

Incorrect – Bottom-up KRIs remain essential

despite regulatory changes.

PRMIA Reference for Verification

PRMIA Risk Indicator Best Practices

Basel Committee’s Risk Measurement and Reporting Guidelines