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Risk appetite today is a core consideration in any enterprise risk management approach. As well as meeting the requirements imposed by corporate governance standards, organisations in all sectors are  increasingly being asked by key stakeholders, including investors, analysts and the public, to express clearly the extent of their willingness to take risk in order to meet their strategic objectives.

The Institute of Risk Management (IRM) has published new guidance on the subject of risk appetite and tolerance aimed at helping organizations better understand the risks they take when pursuing their strategic objectives. IRM’s guidance document has been endorsed by the Chartered Institute of Internal Auditors, the Chartered Institute of Management Accountants, the Institute of Chartered Secretaries and Administrators, The Chartered Institute of Public Finance and Accountancy and Alarm, the public risk management association.

The guidance is endorsed / supported by organizations such as

  • alarm . The Public Risk Management Association
  • Chartered Institute of Internal Auditors
  • Chartered Institute of Public Finance and Accountancy
  • Chartered Institute of Management Accountants (CIMA)
  • Institute of Chartered Secretaries and Administrators (ICSA)
  • Charterhouse Risk Management

Risk Appetite is always a debated topic and many of the entities would have defined it very vaguely. This guidance on the risk appetite would be a good start if you have not already started the work on this or looking forward for improvements.

The IRM paper Risk Appetite and Tolerance is available for free download at http://www.theirm.org/publications/risk_appetite.html