Glossary term

Risk Tolerance

This term has 2 definitions.

1. Risk tolerance is the specific level of risk an organization or individual is willing to endure after implementing risk controls. It represents the acceptable variation in outcomes related to achieving objectives. Understanding risk tolerance helps guide how much risk can be managed or accepted, ensuring decisions align with the organization’s capacity to handle potential losses or disruptions.

2. Risk tolerance is the acceptable level of variation in outcomes that an organization is prepared to handle in pursuit of its objectives. It reflects how much deviation from the risk appetite is permissible and helps guide responses to unexpected changes. Risk tolerance is often quantified to support consistent decision-making and effective risk management practices.

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