How to Calculate Risk Appetite and Risk Tolerance

USING RISK METRICS TO SET THE FOUNDATION OF YOUR ERM STRATEGY

Companies in every industry face risk on a daily basis. However, when a company reaches the enterprise level, it becomes unmanageable to tackle risk management manually via spreadsheets.

It’s at this point that they will typically turn to enterprise risk management (ERM) tools to empower them to scale their workflows and better identify, evaluate, monitor, and mitigate risks.

However, with a dynamic business environment, it can be challenging to assess risk tolerance and appetite as the first step to an ERM strategy.

In this eBook, we share how to calculate risk appetite and risk tolerance. You’ll learn:

• The difference between risk appetite and risk tolerance
• How to calculate residual risk
• How to use residual risk calculations to determine risk appetite and tolerance
• How to apply risk appetite and tolerance in the real-world