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Barnett Waddingham
0333 11 11 222
Setting risk appetite is a board accountability and can be fundamental to the way an organisation is run, the risks it chooses to take and how decisions are made.  Yet most boards, organisations and even risk professionals struggle with the concept.  Many of those that have defined risk appetite are not experiencing such profound effects.

Our practical approach combined with a quantitative model and developed from the bottom-up has immediate demonstrable impact.  We suggest a multi-phased approach beginning with a risk appetite framework, training workshops and applying the concept in a small number of areas before wider extrapolation and engagement at board or committee level.

How much is too much?

We’ve developed a proprietary financial risk tolerance model which we use to support our risk appetite discussions

Case Study - Risk Appetite and Tolerance

We helped this client understand, define and use risk appetite by giving them a framework to apply across a number of principle risks.

Specifically for risks - such as health and safety where the appetite was very low, we helped them articulate what this means; setting out the minimum controls that would be expected by the Board and how this would be measured. Indeed, some minimum expectations turned out to be aspirational with clear gaps and priority actions. The Chief Operating Officer commented that this exercise brought about discussion topics and focus that would never otherwise, be talked about at the Executive Committee.

"We asked Barnett Waddingham to help us with our risk appetite because we felt they had a fresh and interesting approach to this challenging topic.  Indeed, Danny and the team delivered a terrific project culminating in an engaging workshop with our Executive Team where we’ve improved our understanding of risk appetite and can clearly see the application, benefits and how this can be used sustainably.  The ‘ah-ha’ moment was when they distinguished between rewarded and un-rewarded risks.  I believe the solution they’ve given us aligning risk appetite to key risk areas, combining specific statements, metrics and escalation points works well for our business."

- CFO, Major UK Airport

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