Risk Appetite

Risk Appetite refers to how much risk an organization is willing to take in order to attain appropriate or sought-after returns. How much risk is an organization willing to take in order to attain appropriate or sought-after returns? In practice, answering the question can be exceedingly difficult.

However, when risk appetite is properly understood and clearly defined, it becomes a powerful tool, not only for managing risk, but also for enhancing overall business performance.

Risk Appetite

Why should we take into account our risk appetite?

Because a clearly understood and articulated statement of risk appetite helps unlock value by better aligning decision-making and risk.

Even though risk appetite is a term widely used, yet in a demanding regulatory and governance environment, organizations of all kinds and sizes are grappling with the concept.

Risk Appetite Example

Let’s take starting web based business as an example.

The possible income that we are looking in starting web based business is through adsense revenue.

The adsense income that could be generated from this content publishing business is predictable, as long as you know and understand about supply and demand, traffic and conversion.

What does it takes in earning extra income with adsense revenue ?

Well, you only need a domain name (cost USD 9.99 per year) and a hosting (cost around MYR 468, the most expensive you could get enough to host your files), and maybe a few hundred bucks to setup the content publishing system (recommended CMS system - wordpress).

So, as long as your adsense income breaks USD 150, the rest could be your gross profit.

What if you can make such an income as shown in Automated Internet Business case studies?

Well, this example is a very low risk appetite with a very high passive residual income possibility that could be generated via content publishing.

So, must it really be high risk high return ? Think again.

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