Most organizations think key performance indicators (KPIs) and key risk indicators (KRIs) are two sides of the same coin. They also use them as synonyms of each other. However, the difference lies in their applicability. In his blog article, Bernard Marr helps you tell apart KPIs from KRIs.
Distinguishing KPIs from KRIs
Key risk indicators are those that provide your early warning signs of the impending risks. Key performance indicators are more strategic. Let’s find out below how the KPIs and KRIs differ:
Features of Key Performance Indicators
KPIs help to find out if your staff, departments, business units, projects, and organizational branches are meeting their strategic objectives. They measure the performance objectively, against the industry standards or company benchmarks. You must have some strategic goals straightened out before setting the parameters. It will help you realize if you are moving in the right direction. When you establish the key performance indicators, you can supervise and determine the tangibility of the path.
Features of Key Risk Indicators
KRIs deal mainly with risks. With these parameters, you discover the quantity, intensity, and nature of your organization’s risks. You can analyze how these issues would affect your company’s performance and reputation. They help you prepare for the unavoidable risks as well as solve the predictable ones. When you have relevant KRIs, you can recognize the most serious ones, analyze, and compare them. To avoid their recurrence, you should establish a structure for reporting and supervision, notify the key stakeholders, and resolve early.
How They Work Together
- A KPI looks after IT system performance while a KRI reports IT cyber incidents.
- If market share growth is the business goal, it is a KPI. In comparison, the KRI conveys the risks involved if you lose the market shares.
- Employee engagement and job satisfaction are KPIs, while KRIs are the reasons employee attrition could increase.
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