Risk Tips Issue 41: Risk Appetite in Financial Services Industry
- Nov 06, 2018
- RIMAN, Wikipedia, Deloitte
Risk appetite is the level of risk that an organization is prepared to accept in pursuit of its objectives, and before action is deemed necessary to reduce the risk.
While the concept of risk appetite existed before the global financial downturn, the benign economic conditions that existed at the time gave firms little reason to focus on it. Certainly, it was not as widely used in the industry as it is today and the related terminology was not as common.
Prior to the downturn, there was a general sense of comfort among the financial services industry/firms around levels of risks assumed and how the desired levels of risk were articulated.
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