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P1-How risk appetite affects risk policy

By Leon Rice,2014-05-18 23:42
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my rough work! more fantastic works wil come soon!

How risk appetite affects risk policy

    Risk appetite has an important influence on the risk strategies an organisation has in place.

Risk attitude

Risk averse

    Seeking to avoid risks and withdraw from risky situations

Risk seeking

    Actively seek risk, in the belief that higher the risk equals higher the returns.

Risk averse organisation

    For example: a charity or public sector organisation will be characteristically risk averse the organisation would seek to avoid risky situations.

    Therefore the risk management system the organisation develops may be less sophisticated and less costly.

Risk seeking organisation

    Conversely an organisation actively seeking additional risk, financial derivative

    traders for example.(Further to search my articles on it) Should:

    ; see risk management as of strategic importance

    ; invest in a comprehensive risk management system.

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