Hungry for Risk – A risk appetite framework for operational risks

Abstract

The economic crisis, subsequent regulatory changes and the practical lessons learned all indicate that the identification and measurement of risk appetite, as well as its incorporation into strategic planning and risk management will increasingly become a requirement for companies. Our paper seeks to identify ways to comply with this expectation and the potential benefits of compliance. We will explain these through operational risks that affect the entire organisation and are not specific to any sector. In practical implementation, it is essential that, taking into account the specificities of the company and its environment, certain simplifications are made in comparison with the literature. Taking a simpler approach initially and enhancing it according to the lessons learned, in the longer term it is possible to develop an organisation that is more risk aware and is capable of responding to changes flexibly and quickly.