RISK APPETITE LIMITS
This part of risk appetite covers the detailed levels of risk to which the firm is willing to be exposed in order to achieve its business objectives. In particular, it concerns the allocation of the firm’s aggregate risk appetite statement to business lines, legal entities where applicable, specific risk categories, concentrations and other appropriate levels, as shown in Figure 4.4.
Figure 4.4 Risk appetite limits
The limits should be specific and should take account of the sensitivities of the risks that they are measuring. In short, the limits should follow the SMART acronym: specific, measurable, assignable, realistic, ...
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