KRIs are metrics used to provide an early signal of
increasing risk exposure in various areas of the organization.
In some instances, they may be little more than key ratios
that the board and senior management track as indicators
of evolving problems, which signal that corrective or
mitigating actions need to be taken. Other times, they may
be more elaborate, involving the aggregation of several
individual risk indicators into a multi-dimensional risk score
about emerging potential risk exposures. KRIs are typically
derived from specific events or root causes, identified
internally or externally, that can prevent achievement of
strategic objectives. Examples can include items such as
the introduction of a new product by a competitor, a strike
at a supplier’s plant, proposed changes in the regulatory
environment, or input-price changes.