Most organizations don’t fail at risk management because they lack data, but because they don’t have the right data. As a result, they don’t see risk escalating until it’s already material.

In fact, nearly 75% of enterprises experienced at least one critical risk event in the past year, according to Forrester's The State Of Enterprise Risk Management, 2025. In many of these cases, leadership had metrics in place, just not the right ones.

This is a common issue when putting key risk indicators in practice.

On paper, KRIs are designed to act as early warning signals to prevent risk events that may derail your plans or objectives. In reality, many organizations:

• Track indicators that are too generic
• Confuse KRIs with key performance metrics
• Collect data without clear thresholds or ownership

The result is a false sense of control and awareness, and often delayed response when risk actually spikes. To ensure your risk management program is effective, we’ve written this guide about how KRIs actually work in the real world, not just in theory.

Keep reading to understand:

• How KRIs differ from KPIs in decision-making
• Common mistakes that cause risk management programs to fail
• What effective KRIs look like in practice
• Actual examples of KRIs that apply across cybersecurity, operations, finance, and more
• Which KRIs matter most for modern GRC programs in 2026

What are key risk indicators?

Key risk indicators (KRIs) are metrics used to proactively measure and mitigate risks that a business may face. They serve as early warning signs of upcoming crises, which can provide an organization’s management team time to create an action plan to mitigate that risk’s potential impact or prevent it from occurring in the first place. 

KRIs are tied to risk appetite, which sets a threshold for the level of risk exposure that a business will take on to achieve its objectives. When used effectively, KRIs alert leadership and other stakeholders of any upcoming high-risk threats or vulnerabilities that might exceed that threshold so they can respond accordingly.

KRIs aren’t meant to track every specific risk that your company may face. Instead, they’re meant to track the most important types of risks that could put your business’s primary objectives and priorities in jeopardy. 

To use these metrics effectively, we first have to understand what KRIs are—and what they are not. 

Key performance indicators vs key risk indicators

Both KRIs and key performance indicators (KPIs) are metrics that help businesses make informed decisions and accurately plan for the future.

While KPIs and KRIs are complementary, they serve different purposes and confusing them is one of the most common reasons risk programs fail. Let’s take a closer look at their differences below.

The 5 most common mistakes organizations make with KRIs

KRIs can significantly strengthen enterprise risk management, but many programs fail for predictable reasons. The issue is rarely a lack of data. More often, KRIs aren’t designed to drive decisions.

Here are the most common mistakes organizations make when developing KRIs:

1. Confusing KRIs with performance metrics

If an indicator only changes after damage occurs, it’s measuring performance, not risk. Effective KRIs are forward-looking signals that warn leadership before objectives are impacted.

2. Tracking indicators that are too generic or too numerous

When everything is labeled a “key” risk indicator, nothing stands out. Effective KRI programs focus on a small number of high-impact risks tied directly to core business objectives and risk appetite.

As NIST SP 800-55 Vol. 1 notes, “With quantitative metrics - initially at least - less is often more.”

3. Collecting data without clear thresholds or ownership

Indicators without defined tolerance levels or accountable owners quickly become passive reports. KRIs should trigger action when thresholds are exceeded, with clear responsibility for response and remediation.

4. Failing to connect KRIs to action

A KRI that doesn’t prompt a predefined response adds reporting overhead without reducing risk. Effective programs pair each indicator with clear escalation paths and remediation steps.

5. Treating KRIs as static metrics

Risk environments change faster than most reporting cycles. When KRIs are tracked manually across spreadsheets and slide decks, the data is often out-of-date by the time it reaches leadership.

As Scott Cronin, the former Global Head of SOX Compliance & Controls at BNY Mellon, put it in a panel discussion about risk trends:

How to develop KRIs

Before your business can begin benefiting from KRIs, you’ll need to do a bit of prep work. We walk through the steps for KRI design below. 

1. Understand your key objectives

A KRI is a metric for tracking the potential occurrence of certain risk events that will have an adverse effect on your company’s objectives.

So before you can begin developing effective KRIs, it’s essential that you understand your company’s most important objectives. For example, one core objective might be to increase profits by increasing revenues and decreasing costs. There are several risks you may map to this core objective, like economic downturns, supply chain changes, or operational inefficiencies.

2. Identify priority risks

The risks that pose the biggest threat to your business objectives— with a high probability of occurring and a potentially damaging outcome — are the kind you’re looking to include when you establish KRIs.

Here are a few ways to identify relevant risks:

• Conduct a risk assessment to identify the risks that will cause the biggest impacts to your overall objectives and goals. 
• Review your risk register to tip you off to certain risks that are subject to swift changes in risk level, indicating that they could benefit from the early warning of a KRI.
• Keep your core business objectives at the forefront as you design your KRIs, which will help you prioritize the most important risks.
• Consider risks that fall above or below your risk appetite threshold, as they will likely need additional oversight. 
• Conduct an internal audit to assess your internal control environment against a framework as you prepare towards audit readiness.

3. Select KRIs

There are two primary methods for choosing KRIs: top-down and bottom-up approaches. 

• Top-down approach: Senior leadership selects KRIs for the entire organization. This approach can be helpful in aligning with your corporate governance strategy and can help the organization’s internal acceptance of risk impact and how it can affect business objectives. 
• Bottom-up approach: Business units across the organization select and monitor KRIs that map to their operational processes. The bottom-up approach ensures risks are tracked on a more granular level and fosters buy-in from departments. 

Whether you opt for a top-down or a bottom-up approach, after top-priority risks have been identified you can begin to design KRIs. For initial KRIs, it can be helpful to start small with two or three indicators for your top risks. 

When setting up KRIs, keep things simple by focusing on your priority risks. Include relevant subject matter experts from your organization to help identify a few key indicators that will help you properly track risks. 

Remember that key traits of a good KRI are:

• Measurable: KRIs are quantifiable by percentages, numbers, etc. 
• Predictive: KRIs can be used as an early warning system.
• Informative: KRIs are used to shape decision-making. 
• Comparable: KRIs can be benchmarked internally and to industry standards. 

4. Set thresholds for KRIs 

Once you’ve identified KRIs, set upper and lower tolerance values to track against each risk. Any time a risk moves beyond these thresholds of acceptance, you should alert key stakeholders and assign follow-up tasks to mitigate that risk. 

These tolerance values can be changed as data is captured, so don’t spend too much time perfecting them in the beginning. To start, you can use industry norms or internal criteria to set them and ensure they’re approved by your board of directors or other key leadership.  

When you’re confident in the data being collected from your initial indicators, you can expand the KRI program into different business departments.

5. Maintain KRIs over time

Once KRIs are in place, they need to be monitored and tracked regularly, whether in real time or with a quarterly check-in.

Automation can help simplify this process, but you may also want to consider appointing key individuals to manually track certain indicators that make sense for your organization.  

Additionally, you can use the first few data-gathering periods as a way to check if your risk threshold settings are correct. This will help ensure that future alerts are configured correctly and prevent false alarms.

It’s important to document and report all risk occurrences related to your KRIs. This should include a formal process for alerting key leadership when indicator tolerance levels are high.

Key risk indicator template

To help you turn KRI theory into something operational, we created a simple Key Risk Indicator template that walks you through designing KRIs step by step. The template mirrors the same process outlined above and ensures each indicator is tied to a real business objective, measurable risk signal, and defined response.

The template helps you:

• Define the business objective you’re protecting
• Identify sources of risk that could undermine that objective
• Establish a clear KRI tied to that risk
• Set key thresholds that indicate when risk is becoming unacceptable 
• Assign a monitoring frequency (e.g., real-time, weekly, or quarterly) so indicators stay current

An example is included in the template to show how these fields work together in practice.

Key risk indicator examples

While you can map KRIs to any aspect of your business, common KRI types include operational, financial, technological, and people-related indicators. 

Find a definition and examples of each type of KRI below.

Operational KRIs

Operational KRIs are closely related to operational risk. Examples include: 

• Process inefficiencies
• Internal failures
• Leadership changes

Financial KRIs

Financial KRIs are commonly used by banks and CPA firms. Examples include:

• Economic downturn
• Regulatory changes
• Acquisitions
• Budget changes

Technological KRIs

Technological KRIs are used by businesses across industries. Examples include:

• System failures
• Data breaches
• Regulatory changes

Cybersecurity KRIs

These KRIs are used to measure the performance of controls and reduce cybersecurity risks and cyber attacks. Examples from NIST SP 800-55 Vol. 1 include:

• Mean time to remediate vulnerabilities
• Percentage of systems with up-to-date patches
• Relationship between incident response time and breach cost
• Known breach costs among industry peers

Most important KRIs for an organization’s GRC program in 2026

While KRIs can be implemented in operational, financial, technological, and people-related domains across an organization, they are critical to implement in modern governance, risk, and compliance (GRC) programs. GRC KRIs monitor and reduce the risks most likely to affect your operational resilience and data security and privacy. 

Below are some of the most important key risk indicators for GRC programs this year.

Why KRIs are more important than ever in 2026

According to Forrester’s most recent Business Risk Survey,  nearly three in four enterprise risk decision-makers report that the number of critical risk events their organization experiences has increased or stayed the same.

As risk events like ransomware attacks, regulatory enforcement, and supply chain failures become more frequent and costly, KRIs are critical to improving both regulatory compliance and operational resilience.

Organizations that rely solely on lagging metrics often discover risk only after the damage is done. KRIs help leadership anticipate disruption, respond faster, and reduce the downstream cost of incidents, audits, and outages.

KRI implementation is just one of the approaches for baking risk prevention into your business. Read the visual guide below to help your business adopt a more risk-minded cybersecurity approach or talk to an expert about how Secureframe’s automation can help.

This post was originally published in May 2022 and has been updated for comprehensiveness.