Risk Appetite

Risk appetite refers to the level of risk an individual or organization is willing to accept in pursuit of their objectives. It reflects their comfort with uncertainty and potential losses in order to achieve desired outcomes. For instance, a company might take on new projects that have a high potential reward but also a significant chance of failure, while another may prefer safer, more predictable investments. Understanding one's risk appetite helps in making informed decisions that align with personal values or business goals, balancing potential gains against the likelihood of adverse results.