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Difference between KPI and KRI

Last Updated : 10 Oct, 2023
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Measurement is useful when it is expressed in numerical terms, so as to compare the actual performance and the targeted performance. Moreover, the measurement of both the positive things and negative things is important for the success of the business. For this purpose, KPI and KRI come into the picture. Key Performance Indicator (KPI) is defined as a measurable value that businesses and organisations use to evaluate and track their progress toward specific goals or objectives. Key Risk Indicator (KRI) is defined as the measurable metrics or indicators used by organisations to assess and monitor potential risks and vulnerabilities that could affect the organisation’s performance.

What is Key Performance Indicator (KPI)?

Key Performance Indicator (KPI) is defined as a measurable value that businesses and organisations use to evaluate and track their progress toward specific goals or objectives. KPIs are important because they provide a clear and quantifiable way to assess the success or performance of a particular aspect of a business. KPIs can vary widely depending on the industry, organisation, and goals, but they should always be:

  • Relevant: KPIs should be directly related to the specific goals or objectives of the organisation or a particular project.
  • Measurable: KPIs should be quantifiable and based on data or metrics that can be tracked and analysed.
  • Time-bound: They should have a defined time frame or period for measurement, allowing for comparison over time.
  • Actionable: KPIs should provide meaningful insights that can guide decision-making and actions to improve performances.

What is Key Risk Indicator (KRI)?

Key Risk Indicator (KRI) is defined as the measurable metrics or indicators used by organisations to assess and monitor potential risks and vulnerabilities that could affect the organisation’s performance, objectives, or financial stability. Unlike KRIs, KPIs are designed to focus on measuring the negative events or factors that may lead to adverse outcomes. The key characteristics of KRIs are:

  • Relevance: KRIs should be directly related to specific risks that an organisation wants to monitor.
  • Measurability: They should be quantifiable and based on data or metrics that can be objectively measured.
  • Timelessness: KRIs are often associated with specific time frames for monitoring and reporting to enable early detection of potential risks.
  • Actionable: KRIs should provide early warning signs, allowing organisations to take proactive measures to mitigate or manage risks.

Difference between Key Performance Indicator (KPI) and Key Risk Indicator (KRI)

Basis Key Performance Indicator (KPI) Key Risk Indicator (KRI)
Meaning Key Performance Indicator is defined as a measurable value that businesses and organisations use to evaluate and track their progress toward specific goals or objectives. Key Risk Indicator (KRI) is defined as the measurable metrics or indicators used by organisations to assess and monitor potential risks and vulnerabilities that could affect the organisation’s performance.
Full Form Key Performance Indicator Key Risk Indicator
Objective These are used for goal-tracking, performance management, and decision-making to promote organisational success and development. These are used for risk management and focus on any potential threats or issues.
Responsibility The responsibility is taken by an individual or team. All the responsibility is taken by the CEO.
Examples
  • Revenue growth rate
  • Customer satisfaction score
  • Employee productivity
  • Market share
  • Net promoter score (NPS)
  • Volatility in financial markets
  • Cybersecurity breach attempts
  • Regulatory compliance violations
  • Supplier disruption risk
  • Economic indicators affecting business conditions
Time Horizon It has short to medium-term time horizons. It has the possibility of both, short-term and long-term time horizons.

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