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Monday, July 21, 2014

Risk Appetite In Operations

Assessing and measuring risk appetite away from an investment portfolio is perhaps one of the most difficult risk management initiatives practitioners have to entertain, it is also discussed often on risk forums and written about avidly by many consulting firms.  Yet, very few subject matter experts actually delve into the semantics required to measure risk appetite and this is kind of frustrating. I personally have plenty of clients that have expressed their sentiments around how difficult the entire risk appetite program is and many managers out there struggle to take this important aspect of risk management to completion.

In this article we release a white paper that steps through the entire process of measuring and assessing risk appetite, dealing with the numbers specifically rather than just top level summaries and catch phrases on what risk appetite is.

Risk Appetite Paper
The risk appetite paper can be downloaded from this LINK ] and is separated into unique sections that take in; a thematic review of how ISO 31000 addresses risk appetite, it walks through the steps for setting and measuring risk appetite, it also shows the numbers and sample reports as a case study for performing a comprehensive risk appetite assessment.

Risk Appetite Paper [ LINK ]

When risk managers have to measure risk appetites in a portfolio of traded assets or at a group financial level, there are plenty of well established and understood techniques for proceeding forwards. However, these techniques don't translate into workable activities for measuring risk appetite in the operations of a business and risk analysts can't just cut n' paste the financial calculations from a treasury report into some 'low, medium, high' traffic light risk summary chart. 

Given operations is where the risk appetite assessment pain is most severely felt, our case study focuses on measuring risk appetite in that setting specifically.

I trust practitioners will find this case study useful and as always, I welcome your feedback and comments.

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