Conservative

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Risk appetite and risk budgeting.

Conservative financial and operational strategies are those in which only the lowest levels of risk are acceptable.

The primary idea is to exercise caution in investment strategies by protecting all owned assets without any value loss, and to seek enhancement in their value only when this is assured.

Commonly observed in many public institutions and several established businesses. Links in terms of corporate culture for example, to Deal & Kennedy’s Slow feedback/low risk, process culture.


Examples include:

  • Lending only to the very strongest credits, with substantial collateral.
  • Using very little debt, or no debt, in the corporate capital structure.
  • Maintaining large reserves and large amounts of high quality liquid assets.
  • Hedging a high proportion of, or all, material financial risks.


Also known as 'prudent'.


See also


Other links

Risk appetite and risk tolerance: Practical guidance, www.theirm.org