This document discusses different types of risk indicators. Operational risk indicators provide information on an organization's exposure to operational risks. Environmental risk indicators include trading volume, volatility in foreign exchange markets, exchange rate volatility, and interest rate volatility. Financial risk indicators measure deal volatility, dealing profit, and activity-based costing variances. Industrial risk indicators track metrics like the number of defective items produced and maintenance issues for production lines.

2. The risk is the probability of loss or injury, the degree of
probability of such loss. Risk is composed of the
demand that bring in variations in return of income.

3. RISK INDICATORS
Risk indicators involve the identification of specific factors
that are predictive of operational failure. The premise of
this approach is that the identified factors are generally
indicative of stress that are likely to result in operational
failure. Risk indicators arte available at both
high levels and at specific process level.

4. TYPES OF RISK INDICATORS

5. OPERATIONAL RISK INDICATORS
In an operational risk context a risk indicator is a
metric that provides information on the level of
exposure to a given operational risk which the
organization has at a particular point in time. In
order to provide such information the risk
indicator has to have an explicit relationship to
the specific risk whose exposure it represents.

6. ENVIRONMENTAL RISK INDICATORS
The environmental risk indicators could be such
things as trading volume and volatilities on major commodities
or foreign exchange markets . These can be known as follows:
1. Trading volume
2. Volatility in forex trading
3. Exchange rate volatility
4. Interest rate volatility
1. Trading volume:
One integration of this result is that the correlation
between trading volumes and volatility is positive during
normal times that is when volatility is relatively low. When
volatility reaches very high levels this may includes traders
to withdraw from the markets thereby leading to a negative
correlation.

7. VOLATILITY IN FOREX TRADING
Volatility in forex trading refers to the amount of uncertainty or risk involved
with the size of changes in a currency exchange rate. A higher volatility
means that an exchange rate can be potentially spread out over a larger range
of values. On the other hand a low volatility would mean that an exchange
rate does not fluctuate dramatically, but changes in the value at a steady pace
over a period of time.

9. Interest rate volatility refers to the variability of interest rates on loans and savings over
time. Businesses are affected by volatile interest rates because they impact borrowing
costs and investment account earnings. As a business owner, you need to recognize and
track interest rate volatility to take advantage of high savings rates and low borrowing
rates.

10. FINANCIAL RISK INDICATORS
Deal volatility
Dealing profit
Activity based costing
variances
Deal volatility:
various models have been developed to produce volatility forecast and
reduce the financial risk by the several alternatives like implied volatility,
realized volatility. These are used for firm wide value-at-risk calculations in
many financial institutions.

11. Dealing profit:
if the ratio of the profits from the
trading of the assets are measured by dealing
related profits to the current earnings is high,
this means the capability of the banks, traders
significantly influences the banks profits and
losses
Activity based costing variances:
Activity based costing variances analysis that can
be used by managers to increase productivity and reduce
costs. Activity based costing is one method for determining
costs and hence will have implications of some of the
variances calculated.

12. INDUSTRIAL RISK INDICATORS
Number of defective items produced in each production
line.
Percentage of defective items produced in each
production line.
Change- daily, weekly, monthly etc in the number of
defective items produced in each production line.
Number of items returned as defective for each product.
Number of maintenance calls for each production line
absolute or per unit of time.
Number of unplanned stoppages of each production
line.