Risk appetite

What is your business’s appetite for risk? Are its current risks a comfortable fit or is the business taking one risk too many?

At Zurich Strategic Risk we can help you understand, define and communicate your business’s appetite for risk. By removing the need to rely on ‘gut feel’ we can help managers make sound decisions on the risks your business retains, those it reduces through strategic or operational change, and those it transfers.

Defining the right level of risk

We can use a variety of proven approaches to help you establish an appropriate risk appetite framework for your business.

In addition, we will help you to use the experience and expert knowledge of the people within your organisation to establish the types and levels of risk you face. Putting these two measurements together makes it clear which current risks are acceptable to the organisation and which need to be reduced or transferred. This leads to enhanced performance through better-informed decisions, more realistic business priorities and a business culture that is more aware of risk.

Enterprise-wide risks should also be recognised within the organisation’s key performance indicators. In this way risk appetite can be communicated throughout the business and can become an integral part of the organisation’s success.

Options for changing or retaining risk

Putting values on risks

Individual circumstances will dictate the appropriate level of complexity necessary for valuing risks. Typically the level of a risk will be measured by the likelihood of it occurring and the financial impact if it does.

Our approach can go beyond this by:

• capturing experts’ opinions of loss severities and frequencies
• calculating statistics for individual loss scenarios and the total losses an organisation could sustain as a result.

This gives you a picture of risk that is both wider and more detailed - one that you can use to make confident business decisions.

Grouping risks with respect to operational activity

The benefits of defining risk appetite

Defining the level of risk your organisation is comfortable with will help you to:

• make better informed business decisions
• focus on the risks that exceed the defined appetite for risk
• develop a business culture with a high awareness of risk
• strike a balance between daring and prudence.

Why choose Zurich Strategic Risk?

• We recognise that not all risks can be treated and quantified in the same way
• Our facilitation skills and emphasis on achieving consensus help identify, distil and consolidate key risk factors and set targeted actions which everyone in the business supports
• Our recognition of the close relationship between risk management and strategic management helps organisations set the appropriate performance measures for the effective control of both strategy
  and risk.