During a quarterly strategy meeting, senior leadership agrees to undertake a series of high-budget R&D projects and enter two new international markets within the next 12 months. Management acknowledges that these moves could significantly increase financial and regulatory exposure but believes the possible returns justify the added uncertainty. Which risk-appetite classification best describes this stance?
An expansionary risk appetite indicates a willingness to accept higher levels of risk in pursuit of significant rewards or growth opportunities. This aligns with the organization's strategy to pursue aggressive growth. A conservative risk appetite involves minimizing risk and focusing on stability, which does not fit the scenario. A neutral risk appetite represents a moderate approach to risk, neither seeking high risk nor avoiding it entirely. Risk avoidance is a strategy where all risks are eliminated, which contradicts the organization's acceptance of higher risks.
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What is meant by 'risk appetite' in the context of organizational strategy?
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What differentiates expansionary risk appetite from conservative risk appetite?
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How does regulatory exposure factor into risk appetite decisions?