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Topics: Agile, Risk Management
Risk Appetite
What is Risk Appetite?
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From the PMIĀ“s Lexicon of Terms:
-Risk. An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more
project objectives. See also issue, opportunity, and threat.
-Risk Acceptance. A risk response strategy whereby the project team decides to acknowledge the risk
and not take any action unless the risk occurs. See also risk avoidance, risk enhancement, risk exploiting,
risk mitigation, risk sharing, and risk transference.
-Risk Appetite. The degree of uncertainty an organization or individual is willing to accept in anticipation
of a reward. See also risk threshold and risk tolerance.
-Risk Avoidance. A risk response strategy whereby the project team acts to eliminate the threat or
protect the project from its impact. See also risk acceptance, risk enhancement, risk exploiting, risk
mitigation, risk sharing, and risk transference.
-Risk Threshold. The level of risk exposure above which risks are addressed and below which risks may
be accepted. See also risk appetite and risk tolerance.
-Risk Tolerance. The degree of uncertainty that an organization or individual is willing to withstand. See
also risk appetite and risk threshold.
Risk Appetite is the amount of risk an organization is willing to take when it pursues a goal or project.

Risk Tolerance is the amount of risk an organization can tolerate.

There is a fine line between both but some do use risk tolerance per individual risk, whereas they use risk appetite are the total risk that the organization can bear in a given risk profile.

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