May 1, 2011
A Comprehensive Guide to Risk Appetite and Risk Tolerance
With the scarcity of useful guidance to help organizations determine risk appetite and risk tolerance, the Institute of Risk Management (IRM) is seeking to clarify and produce guidance to more effectively communicate an understanding of risk appetite. As a result, IRM released a consultation paper with detailed approaches for developing and using risk appetite and risk tolerance in risk management. In addition to the guidance provided, questions are listed throughout the document with the suggestion that they be asked in the boardroom to ensure that risk appetite and risk tolerance are being adequately addressed.