This is because the management’s agreement on the level of risk the organization is willing to take is crucial for setting the risk appetite. Also per CRISC book : The risk practitioner is to "Facilitate the identification of risk appetite and risk tolerance by key stakeholders." Also per same reference "Risk tolerance is defined as the acceptable level of variation that management is willing to allow for any particular risk as the enterprise pursues its objectives. "
Risk appetite is the amount and type of risk that an organization is willing to accept in pursuit of its objectives. Establishing an appropriate risk appetite is critical to achieving organizational goals, as it helps guide decision-making and resource allocation.
To determine an organization's risk appetite, it is essential to gain management consensus.
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