As we have mentioned, risk appetite is perhaps the most important single concept within enterprise risk management. Yet, it is rarely implemented effectively. There is not even a single agreed definition as to what risk appetite is. What we are all agreed upon is that it is important, whatever it is.
Some people use a definition as to the level of loss that should not happen, but for me, that only deals with part of the story. Clearly, risk appetite must be more than that since, for example, if you miss an opportunity, then you may lose out to a competitor. This clearly would still be unacceptable. So, any definition of risk appetite should be able to deal both with what is normally seen as a loss and also what could result ...
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