Risk-taking boundaries

At KRM22, we advocate the implementation of an integrated, real-time, enterprise risk management approach which enables firms to operate at the optimal threshold of risk-taking, driving increased and sustainable shareholder returns.

In this article, I am going to introduce two important concepts related to setting boundaries for risk-taking and seek to clarify their meaning. These two concepts are Risk Appetite and Risk Capacity.

Unfortunately, there is not a definitive and universally agreed definition for these terms. Therefore, I am going to provide a definition based on how we think about these terms and use them in the development of the KRM22 Enterprise Risk Cockpit.

KRM22’s Global Risk Platform provides applications to help you address your firm’s regulatory, market, technology and operations risk challenges and to manage your entire enterprise risk profile. KRM22 is a public Group listed on AIM and headquartered in London, with offices in several of the world’s major financial centers.

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