CFA Level I · CFA Level I Exam · Introduction to Risk Management
A firm's board states the aggregate amount of risk it is willing to take in pursuit of its objectives. This statement is best described as the firm's:
The statement is best described as risk appetite. Risk appetite is the overall amount and type of risk an organization chooses to accept in pursuing its objectives. A risk budget is the allocation of that risk across units, and a risk driver is a source of risk exposure.
- Arisk budget
- Brisk appetiteCorrect
- Crisk driver
Explanation
Risk appetite is the level and type of risk an organization is willing to accept to pursue its goals. A risk budget allocates the acceptable risk across activities, and a risk driver is a source of risk.
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