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Chapter 11

1.2 Risk appetite

Risk appetite is a measure of the general attitude to accepting risk

It can be determined by:

 risk capacity – the amount of risk that the organisation can bear,
and

 risk attitude – the board being risk averse or risk seeking.

1.3 The role of the risk committee

Risk committee

Update Implement Establish
company risk Raise risk processes to policies for

profile and awareness monitor and risk
appetite report risk management

 The committee will include both executive and non-executive directors, with the
majority being NEDs.

 Executive directors are involved as they are responsible for the day-to-day
operations and therefore have a more detailed understanding of the associated
risks.

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