white paper

Developing and Refining Risk Appetite and Tolerance

May 1, 2024

Developing and implementing risk appetite and tolerance is a daunting prospect for many risk professionals, however clearly defined statements lead to more effective decision making, better resource allocation, and a greater understanding of risk/reward tradeoffs.

This report defines the process and delivers insight to guide risk appetite and risk tolerance statement development and implementation. Additionally, it explores the following five most common challenges risk professionals encounter during the process:

  1. How to gain buy-in from senior leadership.
  2. How to align risk appetite to corporate strategy and objectives.
  3. How to keep risk appetite statements current and accurate.
  4. How to keep risk appetite actionable.
  5. How to narrow the focus of a risk appetite statement.

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RIMS, the  risk management society®️, empowers risk professionals to make the world safer, more secure, and more sustainable. Through networking, professional development, certification, advocacy, and research, RIMS and its 80 chapters serves more than 200,000 risk practitioners and business leaders from over 75 countries. Founded in 1950, the Society publishes the award-winning Risk Management Magazine and produces RISKWORLD®️, the largest annual gathering of global risk professionals. RIMS embraces diversity, equity and inclusion and welcomes all risk professionals to connect and learn, explore the online Risk Knowledge library, tune into the RIMScast podcast series, and engage via LinkedInTwitter, and Facebook. To learn more, visit www.RIMS.org.

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