Risk appetite
How much risk an organisation is willing to take in pursuing its goals.
Risk appetite is set by the board and senior management and expressed in statements and limits. Risk tolerance describes acceptable variation around specific objectives.
On the exam
The board sets and oversees risk appetite; management works within it.
Related terms
- Risk acceptanceWhen management decides to live with a risk instead of fixing it.
- COSO ERM frameworkCOSO’s framework linking risk management to strategy and performance.
Test yourself with today’s question of the day.