Executive summary
The aim of this assignment is to define key risk indicators and key performance indicators. Give an explanation of what they are, their importance and relevance to operational risk. The Eskom case study provided for the assignment will be analyzed in depth and discussed with relevance to the indicators.
The discussion will be based on Eskom’s total blackout, what went wrong in the system, the proper management that should be implemented, how the power crisis affected Eskom’s investments and risk ratings, how the poor load shedding affected business, and also its hard effect on the city’s economy.
1. Introduction
Key risk indicator- a key risk indicator (KRI) is defined as an operational or financial variable
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• KRI’s help to form an input for economic capital calculations by helping to produce estimates of future operational risk losses and therefore helping set a base level of capital for operational risk.
• KRI’s are increasingly important to regulators.
• KRI’s are increasingly examined by rating agencies (Cox, 2007:97). Key performance indicators- Parmenter, (2015:118) states that key performance indicators (KRP’s) focus on the aspects of organizational performance that are the most critical for the current and future success of the organization, they are organizational based and are also operationally focused.
Craighead, (2009:419) says that KPI’s helps an organization define and measure progress towards organizational goals. Key Performance Indicators are quantifiable measurements, agreed to beforehand, that define the critical success factors of an organization. In selecting KRP’s, it is critical to limit them to those factors that are essential to the organization reaching its goals.
Importance of key performance indicators
• It should be dependable and
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When power is insufficient Eskom can either increase supply or decrease demand to bring the system back into balance.
When the difference between demand and supply becomes small, this system is referred to as being tight (City of Cape Town, 2015:1). According to Ntsokolo & Govender, (2015) the lesson that Eskom learned from the 2008 load shedding are as follows:
Integration-risks should be discussed to make sure that they do not line up and the company is able to deal with them at first hand.
Communication- the state of the network and what other parties are doing should be discussed so as to be to pull in the same direction.
Risk assessment-when a decision is taken that could have consequential risk on the next person, Eskom has to be thorough in their risk assessment.
Command Centre- the (ECRC) Emergency Command Response Centre programme allows for Eskom to be able to pull strings and get the best buck for their money.
Sufficient coal- Eskom had to make sure that they had enough coal and quality coal.
Diesel – Eskom couldn’t get diesel quick enough to replenish their tanks.
Suggestions to avoid negative impacts in the future
Calldo, (2008:17)
Performance Metrics: Metrics should be established to measure the success of the marketing plan
The International Journal of Human Resource Management, 24(2), 276-292. Van Dooren, W., & De Caluwé, J. (2012). Performance measurement dynamism: exploring the interaction with performance information use. Public Performance & Management Review, 36(1), 59-83. New International Version.
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