ABSTRACT
We’ve seen in Chapter 2 that many different risk-related terms are used when people try to answer the question ‘How much risk should we take?’ There seems to be some convergence on ‘risk appetite’ as the right phrase, with regulators, standards bodies, professional risk associations and consultants all using it. But unfortunately these players use the term in different ways causing real confusion. We think it would be really useful to sort this out and have a consistent and coherent taxonomy of risk-related terms which clarifies how these relate to each other. We’ll address the full taxonomy in Chapter 4, but first we need to consider two central terms in this field. Risk appetite is one, of course, and the other is risk attitude.
