What are key risk indicators (KRIs)?

Key risk indicators (KRIs) are metrics specifically designed to provide an early signal of increasing risk exposure within an organization. They play a critical role in risk management by allowing organizations to identify potential risk issues before they escalate into significant problems. KRIs enable proactive management by helping organizations monitor the levels of risk they are facing and make informed decisions to mitigate those risks.

In the context of risk management, KRIs can encompass various types of data, including quantitative metrics, qualitative assessments, and trend analyses. By consistently tracking these indicators, organizations can detect anomalies or patterns that may hint at emerging risks, thereby allowing for timely interventions.

While other metrics may evaluate organizational performance, inform employees about risk policies, or measure financial profitability, these functions do not capture the essence of what KRIs aim to accomplish. KRIs are about risk exposure and providing insights into the risk landscape of the organization, making option C the most accurate representation of their purpose.