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Exploring Risk Appetite and Tolerance

How much risk an organization assumes – either knowingly or unwittingly – plays a large part in whether uncertain future outcomes actually improve or worsen its position.

Understanding and managing risk appetite and risk tolerance is a key attribute of an effective enterprise risk management program, according to a new Executive Report released by RIMS (Risk and Insurance Management Society, Inc.).

The 12-page ‘Exploring Risk Appetite and Risk Tolerance’ report, developed and written by RIMS ERM Committee members, offers risk professionals practical and concise guidance on facing challenges in defining acceptable boundaries, balancing differing viewpoints, and managing risk and reward trade-offs in daily management. The report highlights four organizations that have defined or are working toward their risk appetite and tolerance statements in quite varied and distinctive ways.

“A well-defined and well-thought-out risk appetite and tolerance strategy encourages organizations to take measured risks in order to generate value and avoid intolerable losses,” said Carol Fox, RIMS Director of Strategic and Enterprise Risk practice. “The new report highlights the importance of aligning stakeholders and encouraging the entire organization to understand, discuss and act on excessive levels of risks that could lead to adverse consequences and, just as importantly, prepare them to utilize available risk capacity for value creation in a more efficient way.”

The RIMS Executive Report is $59 for RIMS members and $129 for non-members. It can be downloaded from the RIMStore at www.RIMS.org/RIMStore

•Date: 17th April 2012 • World •Type: Article • Topic: Enterprise risk enterprise

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