What is Risk Appetite? – Risk Appetite is the degree of risk that an organization is prepared to accept in the wake of its objectives, before action is decided to be necessary to reduce the risk. It may show a balance between the positive and negative risks that change and innovation brings. Although various authorities and standards provide various definitions for risk appetite, they refer to nearly the same meaning.
For example, risk appetite is the amount and type of risk that an organization is prepared to pursue, retain or take according to the ISO 31000. The PMBOK Guide defines it as degree of uncertainty an organization or individual is willing to accept in anticipation of a reward. Either this or that way it helps to guide an organization’s approach to risk management.