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Volume 27, Issue 3

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February 25, 2014

The Risk Appetite Dialogue

Risk levels and uncertainty change significantly over time. Competitors make new and sometimes unexpected moves on the board, new regulatory mandates complicate the picture, economies fluctuate, disruptive technologies emerge and nations start new conflicts that can escalate quickly and broadly. Not to mention that, quite simply, stuff happens, meaning tsunamis, hurricanes, floods and other catastrophic events can hit at any time. Indeed, the world is a risky place in which to do business.

Yet like everything else, there is always the other side of the equation. Companies and organizations either grow or face inevitable difficulties in sustaining the business. Value creation is a goal many managers seek, and rightfully so, as no one doubts that successful organizations must take risk to create enterprise value and grow. The question is, how much risk should they take? A balanced approach to value creation means the enterprise accepts only those risks that are prudent to undertake and that it can reasonably expect to manage successfully in pursuing its value creation objectives.

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http://www.corporatecomplianceinsights.com/the-risk-appetite-dialogue/