Risk Tolerance

Risk tolerance is the level of residual risk that an organization and its stakeholders are willing to bear within a given strategic context. Without clearly defining an organization’s risk appetite and risk tolerance levels, this could pose a risk to the organization.

Boards should be aware of any emerging and collateral risks that affect a company’s strategy or their risk profile. An ongoing dialogue with the management team is critical to help ensure that the company’s strategy remains appropriate given the market conditions and economic situation.

Comments are closed.