Identification - Risk Definitions

Question 1

What is Risk Capacity?

Answer 1

The objective amount of loss an enterprise can tolerate without its continued existence being called into question.

Question 2

What is Risk Appetite?

Answer 2

The amount of risk on a broad level, that an entity is willing to accept in pursuit of its mission.

Question 3

What is Risk Acceptance?

Answer 3

Should not exceed the risk appetite for the organization, and cannot exceed the risk capacity.

Question 4

What is Risk Tolerance?

Answer 4

Any deviation from the risk appetite that is not desirable but is known to be sufficiently below the risk capacity that acceptance of risk is still possible when there is a compelling business need and other options are too costly.