Risk Appetite defines the amount of risk that an organization is willing to take in pursuit of its strategic objectives. It goes to the heart of how an organization does business. Risk appetite varies from organization to organization, across business units for each risk types depending on the circumstances unique to each.
A comprehensive Risk Appetite Framework (RAF) helps better identify, monitor and manage risks by translating risk metrics into reporting and strategic business decisions. The Risk Appetite Framework has an associated process and governance structure, designed to make the implementation of the Risk Appetite an effective risk management initiative.
The main steps involved in the RAF process are illustratively shown below:
Our Framework identifies the key Risk limits across business units for each risk types and defines the thresholds (Limit/ Tolerances) against each of them.Moreover, we have an expertise in designing of the Governance framework around the establishment and monitoring of Risk Appetite.
The Risk Appetite framework includes the Excel based Risk Appetite Monitoring dashboard which can be used on an ongoing basis for internal reporting.