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What Is Risk Appetite?

Risk is a major topic for all boards. In 1:1 discussions with directors and innovation and strategy talks I’ve given over the last year, the topic of risk appetite always seems to arise. Most directors struggle with how to define the risk appetite for their particular board and company.

Recently, I came across the attached outstanding article, Defining Risk Appetite In Plain English from the PwC Center for board governance. This article succinctly defines risk appetite and is a must read for every director!

This article discusses four major topics:

  1. Definition of risk appetite
  2. The risk up appetite process
  3. The boards role in overseeing risk appetite
  4. Questions boards should asking asking management about risk appetite

Risk and risk appetite will continue to be important board topics particularly as they affect strategy, IT risk, social media and reputation risk. Use the concepts and questions in this excellent piece for help focus and frame your board discussions and really define your board’s risk appetite.

PS: You can subscribe directly to the PwC Center for Corporate Governance and get valuable governance resources delivered directly to your inbox by clicking the link.

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