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Setting the tone, appetite, capacity, and thresholds for digital risk

Published on November 30, 2025   27 min

A selection of talks on Technology & Operations

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0:00
Hi. My name is Amalia Barthel. I'm an advisor, consultant, and educator in the areas of digital risk, digital data risks, privacy, compliance, and governance.
0:13
In this talk in the digital risk series, we will discuss a few very important topics in risk management and how to adapt them in the digital world. These concepts are the digital risk tone, appetite, capacity, thresholds, and universe. We will demystify for the audience these terms and at the same time who in the organization has the role to set the tone, appetite, risk capacity, and ultimately the risk thresholds? Listeners will understand where to look for these metrics and how to interpret the guidance provided by the board and senior executives.
0:55
About risk appetite, risk capacity, and risk tolerance. Let's start with some definitions. Risk universe is the full amount of risk, including the unknowns, which could impact, either positively or negatively, the ability of an organization to achieve its long-term mission (or vision). The appetite is the broad-based amount of risk in different aspects of an enterprise that it is willing to accept in pursuit of its mission. Tolerance is the acceptable level of variation that management is willing to allow for any particular risk as it pursues objectives. In the discussion about risk appetite, the term risk capacity is sometimes used as well. This is usually defined as the objective amount of loss that an enterprise can tolerate without risking its continued existence. As such, it differs from risk appetite, which is more a board or management decision on how much risk is desirable.

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Setting the tone, appetite, capacity, and thresholds for digital risk

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