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Dictionary by pitch.dog
Enterprise risk & controls · Core

Risk tolerance

Also called: risk limit

ELI5

The acceptable variation around a risk objective or limit.

Used in conversation

“Can we circulate risk tolerance with the assumptions and open questions marked?”

Pitch context

You will see “Risk tolerance” in board papers, contracts, policies, risk registers and compliance reports when the discussion reaches enterprise risk & controls.

Why it matters: In enterprise risk & controls, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Connected terms

  • Risk appetiteRisk appetite states the amount and type of risk an organisation is willing to pursue or retain; tolerance sets acceptable variation or limits.
When the words have to travel

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Sources & evidence · 3

Direct term-level sources and supporting source families.