However, practical application remains a significant challenge. Our research suggests that only 35% of companies feel their current approach to Key Risk Indicators (KRIs) actually adds value to the organisation. So what needs to change?
Three main ideas on re-imagining KRIs to move from reporting to strategic intelligence have emerged from collaborations with members:
1. More is more
Simplification’ (via fewer KRIs) may be self-defeating, as it diminishes big data potential and will no longer be necessary in the age of artificial intelligence (AI).
2. KRIs per risk don’t deliver intelligence.
The value comes from the aggregation and interconnectivity of myriad causal factors.
3. KRIs are not in the risk report; they are in the background
There was a need to educate employees that risk management is not a negative and that taking risk can be a positive for the organisation if taken as part of an informed decision.
4. Drive innovation
The report should focus on narrative insights and actions informed by the data (e.g., assurance activity, control uplift, decisions required).
Beyond high-level strategy, the fundamental purpose of KRIs must be clearly defined to be able to move forward
Across our members, proactive escalation is now seen as the main purpose of KRIs. In the utilities sector, core applications include strategic issue remediation, proactive management of capital liquidity, and wider threat protection with the emphasis on genuine, proactive protection, not ‘too-late data’.
KRIs also serve as a vital tool for the prioritisation of resources and risk management activity. They enable an understanding of specific pain points and act as a triage mechanism, guiding the business on whether to take immediate action or accept the risk.
Performance reporting remains a core expectation of the risk team, and KRIs allow this reporting to focus on the risks that matter most to the organisation.
Our collaborations with members identified three key elements that must be in place to get KRIs working well.
Moving from standard reporting to a predictive model is a significant undertaking. To move the dial, risk leaders in our membership have been focused on single steps they could take:
- Clarify and align with leadership on the vision for the risk function.
- Ensure the purpose of KRIs and data is aligned with serving that specific vision.
- Upskill risk teams on AI to help imagine and drive new initiatives.
- Integrate emerging risk indicators with current KRIs to tell a more comprehensive story.
- Focus on trend analysis over static, point-in-time data.
- Identify deep causal factors to develop high-level predictive metrics.
- Utilise existing indicators but deliver a new risk-informed perspective.
As the utilities sector faces increasingly complex challenges, the transition from retrospective risk reporting to forward-looking strategic intelligence is essential for building long-term resilience. We are committed to helping our members navigate this maturity journey and transform risk into a genuine strategic asset. To find out more about our work in the utilities sector, or to understand more about reminaging KRIs, please speak to the team
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