Question 33
Domain 3 — Risk Response and ReportingWhat is a Key Risk Indicator (KRI)?
Correct answer: A
Explanation
A Key Risk Indicator (KRI) is a metric that signals rising risk before losses occur. It is used to provide an "early warning of increasing risk exposure," allowing organizations to monitor and respond to emerging threats.
Why each option is right or wrong
A. A metric used to provide an early warning of increasing risk exposure
A Key Risk Indicator is a forward-looking monitoring measure used to flag deterioration in risk conditions before an actual loss event occurs. In risk management practice, KRIs are designed to trigger escalation when predefined thresholds are breached, so they function as an early-warning signal of increasing exposure rather than a measure of past performance or realized loss.
B. A type of insurance policy
C. A risk treatment strategy
D. A regulatory compliance document