Risk appetite and risk tolerance

Teacher

COURSE DETAILS

Today’s business environment is rapidly evolving. There is intense pressure to respond to strategic, cultural, technological, environmental and market changes. A well-devised risk appetite framework provides a way for your company to link strategy and risk management, strengthening risk culture and enhancing performance in these turbulent times.

This course teaches you how to navigate the complex and critical area of risk appetite management and how to develop a risk appetite framework that clarifies your company’s position on risk taking. Learn how to construct risk appetite and risk tolerance statements, which will guide your company’s decisions aligning risks to strategic and business objectives.

These statements help protect organizations against solely pursuing single, narrow goals without considering potential consequences as they pursue rewards for an “appropriate” level of risk. What is appropriate and acceptable for one organization may be unacceptable to another.

Course Objectives

In this class you will learn how to identify key metrics that can be used to build risk appetite and risk tolerance statements. Course participants will walk away with the ability to:

Navigate the dynamic universe of risk appetite criteria using a proven set of common methods
Determine the differences and correlations of the terms risk appetite, risk tolerance, targets and thresholds
Develop approaches for overcoming obstacles
Explore tools for your own risk context
Construct a risk appetite and risk tolerance framework

Topics

Cultivate a risk appetite management mindset
Risk terms and correlations
Risk appetite framework, strategy, and accountability
Navigate risk appetite criteria using common methods
Examples to articulate and measure risk appetite
Measures of enterprise value
Five step risk appetite framework construction
Risk appetite management strategic value communication
Facilitate strategic decision-making employing risk appetite management

Exercises

Participants engage in activities and interactions designed to reinforce course concepts. Examples of exercises include:

Learn how to cultivate a risk appetite management mindset by establishing a baseline scenario to build upon throughout the course
Use RAM vocabulary to communicate your current professional business risk context story
Link strategy to risks by applying knowledge of the link between organization strategy and correlated risks executing it
Draft an action plan listing items for attention and development upon return to office