Risk Metric

From Open Risk Manual


Risk Metric denotes any condensed assessment of risk that distils a quantitative, qualitative or hybrid Risk Analysis into a simple indicator or value that aims to express a degree of risk. Risk metrics are the primary means by which an organization communicates, debates and decides on risk management actions.

More specifically a risk metric may be used to measure[1]:

  • The amount of exposure to a given risk or set of risks
  • The effectiveness of any controls that have been implemented to reduce or mitigate a given risk exposure
  • The performance of the risk management framework


Risk metrics vary widely depending on the Risk Type. Risk management disciplines such as Market Risk or Credit Risk tend to use wider and mathematically more complicated risk metrics.

  • Quantitative, qualitative or hybrid. Quantitative metrics may involve a more or less complicated Risk Model.
  • Addressing individual risks or portfolio risks. In the later case the more technical term Risk Measure denotes a risk metric derived from a Risk Distribution

See Also


  1. Institute of Operational Risk, Key Risk Indicators, Nov 2010