Which term best describes an organization’s decision to undertake risks that offer a reasonable balance between potential benefits and potential harm, without significantly swaying towards either risk aversion or risk seeking?
The term 'Neutral' is used to describe an organization's approach to risk appetite where they are neither aggressive in seeking out risks that may offer substantial rewards nor overly cautious to the point of hindering potential growth. This approach aims for a balance between the two, with decision making that is well-calibrated to engage with risks that offer a reasonable trade-off between potential benefits and potential harm. 'Expansionary' suggests an aggressive stance towards growth and assuming more risk, while 'Conservative' indicates a more cautious approach that avoids risks. 'Risk Mitigation' is a strategy to reduce the impact of risks, but it does not describe an appetite for risk.
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What do risk appetite and risk tolerance mean in the context of organizations?
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How does an organization determine its risk appetite?
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What are some common strategies for risk management aside from adopting a neutral position?