Risk tolerance: Difference between revisions
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imported>Doug Williamson (Expand 2nd definition.) |
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* [[Enterprise risk management]] | * [[Enterprise risk management]] | ||
* [[Guide to risk management]] | * [[Guide to risk management]] | ||
* [[Impact tolerance]] | |||
* [[Risk appetite]] | * [[Risk appetite]] | ||
* [[Risk policy]] | * [[Risk policy]] | ||
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'.
