Key elements to determining risk appetite and risk tolerance

According to the Risk & Insurance Management Society Inc., there are several key elements organizations should keep in mind as they work to determine their risk appetite and risk tolerance.

They include:

• Understanding the concepts

• Balancing risk and reward

• Using risk appetite and tolerance for more than financial measures

• Leveraging positive aspects of risk taking

• Evolving risk appetite and tolerance over time

• Communicating risk appetite and tolerance