New Report Explores Terms, Practical Applications and Examples
NEW YORK (April 12, 2012) — How much risk an organization assumes – either knowingly or unwittingly – plays a large part in whether uncertain future outcomes actually improve or worsen its position.
Understanding and managing risk appetite – the total exposed amount that an organization wishes to undertake on the basis of risk-return trade-offs – and risk tolerance – the amount of uncertainty an organization is prepared to accept in total or more narrowly – is a key attribute of an effective enterprise risk management program, according to a new Executive Report released by RIMS (Risk and Insurance Management Society, Inc.).
The 12-page Exploring Risk Appetite and Risk Tolerance report, developed and written by RIMS ERM Committee members, offers risk professionals practical and concise guidance on facing challenges in defining acceptable boundaries, balancing differing viewpoints, and managing risk and reward trade-offs in daily management. The report highlights four organizations that have defined or are working toward their risk appetite and tolerance statements in quite varied and distinctive ways.
“A well-defined and well-thought-out risk appetite and tolerance strategy encourages organizations to take measured risks in order to generate value and avoid intolerable losses,” said Carol Fox, RIMS Director of Strategic and Enterprise Risk practice. “The new report highlights the importance of aligning stakeholders and encouraging the entire organization to understand, discuss and act on excessive levels of risks that could lead to adverse consequences and, just as importantly, prepare them to utilize available risk capacity for value creation in a more efficient way.”
The RIMS Executive Report is $59 for RIMS members and $129 for non-members. It can be downloaded from the RIMStore at www.RIMS.org/RIMStore. A discount code will be available at the RIMS booth during RIMS 2012 Annual Conference & Exhibition scheduled from April 15 – 18 in Philadelphia.
The RIMS ’12 conference will also feature a session titled “Exploring Risk Appetite and Tolerance” that will discuss certain findings from the report. The session will be moderated by Carol Fox. Panelists will include two members of RIMS ERM Committee: Joanna Makomaski, VP & CRO of HealthNow New York Inc.; and Rupak Mazumdar, Senior Manager, Enterprise Risk Management, George Weston Limited. For more information, visit www.RIMS.org/RIMS12
RIMS ERM Committee, comprised of recognized ERM practitioners, is responsible for developing, deploying and updating tools, training, and other support to help members develop, lead and sustain the enterprise risk management discipline and processes within their respective organizations.
RIMS Strategic Risk Management Development Council is comprised of RIMS members, academics, strategists, consultants and other practitioners who are thought leaders on strategic risk management and related issues.