Risk Appetite and Risk Tolerance

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Do you know the risks to which your company is exposed? Do you monitor and control the use of resources in risk management so that the exposure meets the current risk appetite?

Knowing how to deal with risks can be a competitive advantage for companies. At some companies, appetite and risk tolerance are already considered when defining business strategies and are then broken down into indicators. This is such an important subject that in some sectors the elements of risk appetite and tolerance are determined by regulatory agents, as is the case with the financial system.

In this article, Hans Læssøe discusses the concepts involved in defining risk appetite and tolerance, showing the importance of knowing and using them. He explains that a company can have different levels of risk tolerance in different categories and how to take advantage of this.