Risk appetite
Risk appetite is the amount and type of risk an organisation or stakeholder is willing to accept in pursuing objectives. It should inform choices, targets and controls and be distinguished from risk capacity, the ability to withstand adverse outcomes. Appetites can differ between owners, managers, customers and other stakeholders. A stated appetite is useful only if translated into decisions, limits and monitoring rather than remaining a generic assertion.
Worked example
An essential public service may accept limited financial risk to protect continuity even when a commercial investor would accept a wider outcome range.
Common mistake
Willingness to take risk is not the same as the financial or operational ability to survive a loss.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Direct | September 2026–June 2027 |
| ACCA | SBL | Direct | September 2026–June 2027 |