A Pragmatic Approach to Implementing a Broad and Effective Risk Appetite Framework
Driving Risk Appetite
Risk appetite is a widely accepted concept that remains difficult to apply in practice. In this whitepaper, we address a commonly voiced concern: the inability to implement an effective, enterprisewide risk appetite framework (RAF) due to the difficulty of translating broad, high-level risk objectives into clear, understandable guidelines and metrics for business units and operations personnel.
We answer the question on how to optimize the risk appetite process throughout three sections:
||Background on the increasing importance of finding solutions to the problem of driving risk appetite|
||Establishing a RAF and addressing important elements of driving risk appetite, such as ownership, metrics and issues|
||Seven common pitfalls|