Risk appetite: Difference between revisions
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Risk appetite will be within or equal to the maximum risk tolerance. Any risk responses should be designed such that the 'net' (residual) risk after considering controls does not exceed these boundaries. | Risk appetite will be within or equal to the maximum risk tolerance. Any risk responses should be designed such that the 'net' (residual) risk after considering controls does not exceed these boundaries. | ||
In the non-financial sector, risk appetite is sometimes also known as risk attitude, risk capacity or risk tolerance. | |||
Revision as of 14:25, 31 October 2016
The amount of risk that an organisation is willing to accept in pursuit of value, improved financial performance or of other benefits, with management responsible for setting boundaries or parameters for risk taking.
Risk appetite will be within or equal to the maximum risk tolerance. Any risk responses should be designed such that the 'net' (residual) risk after considering controls does not exceed these boundaries.
In the non-financial sector, risk appetite is sometimes also known as risk attitude, risk capacity or risk tolerance.
'Conservative' strategies are those in which only the lowest levels of risk are acceptable.
More 'aggressive' approaches to risk mean that higher levels of risk may be acceptable, if they are appropriately rewarded.
See also
- Rewarded risk
- Risk averse
- Risk management
- Guide to risk management
- Risk policy
- Risk register
- Risk tolerance
Other links
Risk appetite and risk tolerance: Practical guidance, www.theirm.org
