Risk tolerance: Difference between revisions
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imported>Doug Williamson (Align with Enterprise risk management page.) |
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In this strict sense, risk tolerance is the amount of risk that the firm can actually bear. | In this strict sense, risk tolerance is the amount of risk that the firm can actually bear. | ||
This amount could be represented by | This amount of risk could be represented by the firm's capital, or by an amount of capital above a base amount of capital that cannot be put at risk. | ||
Revision as of 11:32, 2 April 2019
Risk management.
1.
Strictly, an absolute maximum acceptable level of risk.
In this strict sense, risk tolerance is the amount of risk that the firm can actually bear.
This amount of risk could be represented by the firm's capital, or by an amount of capital above a base amount of capital that cannot be put at risk.
2.
The term is also sometimes used more loosely, to mean the same as 'risk appetite'.
