Definition Challenges Since the terms ârisk appetiteâ and ârisk toleranceâ often are used interchangeably and different definitions abound (see âSelected Defi-nitions of Risk Appetite and Toleranceâ below), this tends to add con-fusion when discussing the concepts both internally and externally. For the purpose of this paper, we will use the following definitions: Risk appetite is the total exposed amount that an organization wishes
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