Enterprise Risk Appetite_POV
17 August 2021
Setting and embedding the enterprise risk appetite is a critical function of the board. An appropriate enterprise risk appetite is one that is aligned with the organisation’s purpose and strategy to meet the expectations of its owners/ promoters, shareholders, or key stakeholders. A business that is scaling up may employ a high-growth, high-capital expense strategy, while a more established organisation may pursue more stable and moderate growth. All boards should consider the strategic risks posed with respect to their organisation and have plans for both short-term crisis management and long-term mitigation. The board plays a progressive role in the successful implementation of a risk management framework by monitoring the enterprise risk appetite, defining risk tolerance levels and ensuring adherence to the risk mitigation plan. Risk reporting is an important component for board oversight; however, it must go further than ‘tick in the box’ compliance.