Risk tolerance: Difference between revisions

Latest revision as of 07:49, 5 June 2024

Risk management.

1.

Strictly, an absolute maximum acceptable level of risk.

In this strict sense, risk tolerance is the amount of risk that the firm can actually bear.

This amount of risk could be represented by the firm's capital, or by an amount of capital above a base amount of capital that cannot be put at risk.

2.

The term 'risk tolerance' is also sometimes used in a looser sense, to mean the same as 'risk appetite'.

@@ Line 1: / Line 1: @@
-Risk tolerance describes objective(s) for control of the risk and desired level of performance.
+''Risk management.''
+.
+Strictly, an absolute maximum acceptable level of risk.
+In this strict sense, risk tolerance is the amount of risk that the firm can actually bear.
+This amount of risk could be represented by the firm's capital, or by an amount of capital above a base amount of capital that cannot be put at risk.
+.
+The term 'risk tolerance' is also sometimes used in a looser sense, to mean the same as 'risk appetite'.
-If it is decided to take the risk, it is the extent to which an organisation is willing to accept identified risks, within boundaries which may be set by reference to the likelihood and size of potential adverse financial impact, or by reference to other criteria.
 == See also ==
+* [[Enterprise risk management]]
+* [[Guide to risk management]]
+* [[Impact tolerance]]
 * [[Risk appetite]]
 * [[Risk policy]]
 * [[Risk register]]
+[[Category:Financial_risk_management]]