A company's board of directors establishes a general willingness to accept a certain level of risk to achieve its strategic objectives. This is defined as the company's risk appetite. During project planning, a specific project is allowed to exceed this general level by a specified, measurable amount. What is this acceptable deviation from the risk appetite called?
Risk appetite is the overall amount of risk an organization is willing to accept to achieve its objectives. Risk tolerance is the specific, permissible deviation from the organization's risk appetite for a particular initiative or risk category. Risk identification is the process of finding and documenting risks, while a risk register is the document used to log and track these identified risks.
Ask Bash
Bash is our AI bot, trained to help you pass your exam. AI Generated Content may display inaccurate information, always double-check anything important.
What is risk tolerance and how is it different from risk appetite?
Open an interactive chat with Bash
What role does risk assessment play in determining risk tolerance?
Open an interactive chat with Bash
Can risk tolerance change over time, and if so, what factors influence that change?