A Key Risk Indicator (KRI) is a metric used by organizations to provide an early warning of increasing risk exposures in specific areas. Unlike Key Performance Indicators (KPIs), which measure past performance and look backward, effective KRIs look forward to predict operational vulnerabilities before they result in actual losses.
[System Inputs Baseline] ---> [KRI Early Warning Metric] ---> [Preventative Action Triggered]

To design effective metrics, each KRI must be designed according to the structured SMART control metric framework:
  • Specific: The metric must target a distinct, well-defined operational failure point within the corporate risk taxonomy.
  • Measurable: The data used to calculate the metric must be quantifiable, derived from objective source systems, and independent of manual manipulation.
  • Achievable: The automated data gathering pipelines must be supportable by current infrastructure without causing system performance issues.
  • Relevant: The indicator must correlate directly with changes in the underlying risk exposure it is designed to monitor.
  • Time-Bound: The metric must be refreshed regularly (daily, weekly, or monthly) to ensure the risk team can act within a useful timeframe.

 
PreviousNext