Risk taking is an integral part of business for every financial institution. Traditional thinking is the higher the risk the greater the reward. But, the most rewarded firms are those that have consistently balance risk and reward and understand the level of risk that the firm can profitably absorb.
Risk appetite impacts every part of a firm. A clearly defined risk appetite statement can guide decisions even when circumstances are volatile or uncertain. In this video, Clark Abrahams briefly defines risk appetite and then discusses the key components of a risk appetite statement:
Download the free white paper, The Art of Balancing Risk and Reward, for more information on managing risk through a risk appetite statement.