10.1 Risk culture, appetite and tolerance

Question 1

Exposure to risk can create the potential for p_______ as well as n________ outcomes. It is important that an organisation understands the level of risk taking that is appropriate, along with the risks and o_______ that it wishes to take and those it should limit.

Answer 1

positive
negative
outcomes

Question 2

Risk a_______ can be defined in terms of a willingness to take risk or the acceptability of risk. Organisations in areas where there are significant safety or environmental hazards will often define risk appetite in terms of the a__________ of risk. Most other organisations will find it more appropraite to talk about a w____________ to take risk, since risk taking is needed to achieve most objectives.

Answer 2

appetite
acceptability
willingness

Question 3

Determining an organisation’s risk appetite should help it make better s_________, governance and risk m__________ decisions. This is because an organisation will have a clearer understanding of the risks that need to be taken and those that need to be r_______.

Answer 3

strategic
management
reduced

Question 4

Organisations may set risk tolerance and risk capacity levels. Risk t________ are usually set for specific types of risk or risk indicator and denote the levels of risk that are tolerable and intolerable. Risk c_________ denotes the total amount of risk that an organisation can be exposed to without risking its long term future as a g_______ c_______.

Answer 4

tolerance
capacity
going concern

Question 5

Risk appetite can be expressed in a variety of q___________ and q___________ ways including risk matrices, R__ ratings, organisationsal values and codes of c______.

Answer 5

qualitative
quantitative
RAG
conduct

Question 6

An organisation should determine its appetite for risk, considering factors such as f_________ strength and the risk preferences of its s___________. The board of d_________ or trustees should normally be in charge of this process.

Answer 6

financial
stakeholders
directors

Question 7

C_______ and risk culture are as important as risk management f_________ and processes in influencing how risks are taken and managed within an organisation.

Answer 7

Culture

frameworks

Question 8

Inappropriate risk c______ can lead to excessive risk taking or insufficient risk taking, it may also lead to c__________ breaches. It is very important that an organisation takes steps to prevent inappropraite risk cultures from forming.

Answer 8

cultures

compliance

Question 9

Risk cultures can be assessed, m_________ and controlled using a variety of tools and techniques. These tools and techniques are not perfect. Care must be taken when interpreting the results of risk culture assessments and metrics or attempting to manipulate risk culture. M_________ can be made very easily and this may have an adverse effect on risk culture.

Answer 9

monitored

Mistakes

Question 10

Practical guidance on the assessment, monitoring and c_______ of risk culture is available via a range of good practice sources, including the I___ and UK H__.

Answer 10

control
IRM
HSE