What’s Your Risk Appetite?

What’s Your Risk Appetite?

Risk appetite is the level of “How much risk your organisation is willing to take”. Risk appetite is subjective and is often very different from the organisation’s risk capacity, which is: “How much risk your organisation is able to take”. If an organisation has a willingness to take little risk it is risk-averse and if it is willing to take more risk it is risk aggressive. Needless to say, the higher the risk, the higher the return and more hurtful is the loss if things go wrong. Therefore risk appetite is very much in the heart of how a company conducts its business.

Risk Appetite matrix Risk Averse vs. Risk Aggressive attitude


The risk appetite can vary between different part of the business for example there may be a willingness to take a high risk in moving into new geographies, whereas there may be a willingness to accept very little regulatory risk. Further, some organisations may set the risk appetite risk-by-risk, whereas others may try to take a cumulative approach.

When risk appetite is fully understood and defined it will become a very powerful tool for connecting risk management with business strategy.

For more information and if you would like to talk to a Risk Management Advisor please give us a call or message us.

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