RIMS EXECUTIVE REPORT: Developing and Refining Risk Appetite and Tolerance

Five Most Common Risk Appetite Development Challenges Explored

May 02, 2024

NEW YORK (May 2, 2024) — Developing and implementing risk appetite and tolerance is a daunting prospect for many risk professionals, however clearly defined statements lead to more effective decision making, better resource allocation, and a greater understanding of risk/reward tradeoffs, according to a new RIMS Executive Report titled, “Developing and Refining Risk Appetite and Tolerance.”

Authored by RIMS Strategic & Enterprise Risk Management Council members Lianne C. Appelt, Lorie Graham, and Trisha Sqrow, the report defines the process and delivers insight to guide risk appetite and risk tolerance statement development and implementation. Additionally, it explores the following five most common challenges risk professionals encounter during the process:

  1. How to gain buy-in from senior leadership;
  2. How to align risk appetite to corporate strategy and objectives;
  3. How to keep risk appetite statements current and accurate;
  4. How to keep risk appetite actionable;
  5. How to narrow the focus of a risk appetite statement.

“Risk appetite and tolerance enable and empower risk-based decision-making,” the report notes. “It links risk-taking to the company’s objectives…and [provides] a benchmark for discussing the implications of value-creation opportunities.”

The authors will convene at RISKWORLD® to host the, “Is Your Risk Appetite Statement Working for You?” session on May 7th. The session will address the advantages and challenges of establishing an impactful risk appetite statement. Additionally, the development and implementation of risk appetite and risk tolerance will be a key educational topic at the upcoming RIMS ERM Conference scheduled for November 18 – 19 in Boston.

The “Developing and Refining Risk Appetite and Tolerance” executive report is available in RIMS Risk Knowledge library at www.RIMS.org/RiskKnowledge. For information about RIMS wide selection of risk management publications, learning experiences and events, visit www.RIMS.org.

To learn more about RIMS Strategic and Enterprise Risk Management initiatives, resources and tools, visit RIMS Strategic and Enterprise Risk Center.

About RIMS
RIMS, the risk management society®️, empowers risk professionals to make the world safer, more secure, and more sustainable. Through networking, professional development, certification, advocacy, and research, RIMS and its 80 chapters serves more than 200,000 risk practitioners and business leaders from over 75 countries. Founded in 1950, the Society publishes the award-winning Risk Management Magazine and produces RISKWORLD®️, the largest annual gathering of global risk professionals. RIMS embraces diversity, equity and inclusion and welcomes all risk professionals to connect and learn, explore the online Risk Knowledge library, tune into the RIMScast podcast series, and engage with the RIMS Community on the Society’s social medial channels. To learn more, visit https://www.RIMS.org.

 

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For more information, contact:

Josh Salter, Director of Communications, (212) 655-6059 or JSalter@rims.org

About RIMS

As the preeminent organization dedicated to promoting the profession of risk management, RIMS, the risk management society®, is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS is committed to advancing risk management capabilities for organizational success, bringing networking, professional development and education opportunities to its membership of more than 10,000 risk management professionals who are located in more than 60 countries. For more information on RIMS, visit www.RIMS.org. 

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