What if you were a decision maker in that meeting? How would you determine whether the proposal should go ahead? Is a medium level of risk acceptable or not? Would it be acceptable if the potential impacts were realised? Would having a clearly defined risk appetite have helped?Ī tailored and defined risk appetite can assist an organisation in managing and understanding its risk exposure.It can be used to guide organisational behaviour and strategic decision making. They may determine that the risk is still too high or that it is an unacceptable risk for this area if it impacted, say, participant’s safety. You highlight the advantages.ĭoes your audience have a different risk appetite than you? They might say no – it is far too risky, not something we have ever done before, we do not have the resources, and so on. You explain that once these controls are implemented, there is only a medium level of risk to the organisation. You include a risk assessment that details possible controls that could be put in place to mitigate those risks. Imagine you have a brilliant idea and go to the leadership team with a proposal. Risk appetite is something that is unique to each organisation. This article considers why having a risk appetite is beneficial and provides some suggestions on how to develop and effectively use one. In business, risk management professionals define this as a risk appetite. I like to sit by the pool with my sunscreen and hat on while you may like adventure and thrill seeking. Every day, we make decisions such as what job to apply for, what to invest in, whether to wear a mask, or where to go on holidays, all based on risk and reward.
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