Governance
Key risk indicator
A measurable, forward-looking metric that warns of rising risk exposure before losses occur.
Definition
A key risk indicator (KRI) is a quantifiable metric used to monitor potential threats to an organisation's objectives and to provide early warning of changing risk exposure. Where key performance indicators measure how well things are going, KRIs look forward to where things could go wrong, triggering action when values breach defined thresholds.
References
Definition, early-warning role, KPI contrast
Forward-looking perspective and risk-mitigation purpose
Overview
What it means
KRIs sit inside enterprise risk management as the monitoring layer between risk assessment and response. A well-designed KRI is linked to a specific risk driver, has an escalation threshold, and is reviewed as conditions evolve — examples include liquidity headroom, supplier concentration, overdue safety actions or climate value-at-risk for climate-exposed portfolios.
How it is used
Risk, finance, compliance and sustainability teams track KRIs on dashboards alongside KPIs; in sustainability contexts, KRIs monitor emerging ESG risks such as regulatory exposure, physical climate hazards and supply-chain labour issues.
Why it matters
KRIs convert risk management from post-incident reaction to anticipatory control, which is the essence of resilience.
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