Posted: March 21st, 2023 3:03pm +00:00

Risk Appetite

Risk appetite

Risk appetite is the amount of risk that you are prepared to take in order to achieve your objectives. The financial world has been used to the concept of appetite for many years. As consumers, we will have participated in the assessment of our own appetites. For example, when investing, how often have you seen statements along the lines of, “choose your investment stance, cautious, moderate and adventurous”. In other words, do you want to invest your money in a potentially very lucrative investment but with a higher risk of failure (adventurous) or choose a much safer investment but with lower returns (cautious)? 

This same concept is what is being asked of us in our own organisations, that is, to articulate what exposure are we prepared to accept in order to operate a successful business. How much risk is the right amount to take for the hoped for reward? The OGC’s Orange Book (2020) advises, ‘the Board should determine and continuously assess the nature and extent of the principal risks that the organisation is exposed to and is willing to take to achieve its objectives – its risk appetite – and ensure that planning and decision-making reflects this assessment.

Risk appetite in JCAD’s risk software, CORE 

JCAD has always provided a couple of options to accommodate for the application of appetite but after consultation this has been enhanced within our latest release. Risk appetite is setup within the Administrative module, this includes appetite category (financial, reputational), level & profile (averse, moderate) along with statements & descriptions for each. Now when a risk is in the system a user can choose to link it to one of the appetite statements to which it applies.  

Improving risk maturity

If your organisation is looking to increase its maturity in risk management, the ability to incorporate risk appetite is key. Upgrading to V5 of CORE will allow you to continue to use an existing tool but also take advantage of this and other new features. 

Useful reading; 

Institute of Risk Management –

UK Government


Committee of Sponsoring Organization, COSO Standard – 

News you might like
Has your organisation considered the risks of AI?

While AI offers numerous benefits for businesses, it also comes with potential risks that need careful consideration. Here are some…

Read more
What strategies are being employed by the higher education sector to respond to emerging risks?

Emerging threats pose unique challenges for higher education institutions, but some promising strategies are being implemented to navigate them: Climate…

Read more
Emerging risks for higher education

Higher education institutions are facing a complex landscape of risks, some of which are longstanding challenges, while others are emerging…

Read more

JCAD will subscribe you to our newsletter . Please see our updated privacy policy for more information regarding the use of your data. You can unsubscribe whenever you like through the preferences option on the newsletter.