Risk tolerance

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 could be represented by its 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'.

See also

• Enterprise risk management
• Guide to risk management
• Risk appetite
• Risk policy
• Risk register