Setting risk appetite: know what you want
OpRisk examines the practical application of the concepts of risk appetite, the risk ceiling and the risk profile, taking a broad look at who should decide risk appetite, how it should be articulated, in what context (and to what extent) and what the common pitfalls are
Risk appetite is described as the willingness to take on risk in order to pursue business objectives. It therefore signifies the very essence of the risk-return trade-off made by firms. It is inherently linked to the firm’s strategy and business plans.
It is the top management of the firm that has the authority, accountability, responsibility and vision to (more or less) unilaterally make choices
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