Defining the Risk Appetite and Risk Tolerance

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Risk Appetite: Risk appetite is an organization's willingness to accept risk in pursuit of its objectives. It reflects the amount of risk an organization is willing to take in order to achieve its goals.
Risk Tolerance: Risk tolerance is an organization's ability to accept and manage risk. It is an individual's or organization's willingness to accept the possibility of an unfavorable outcome when engaging in a specific activity or decision.