Risk Appetite
Overview
Risk appetite is the level and type of risk an institution is willing to accept in pursuit of its business objectives. It is defined by boards and senior management and documented in policies. In compliance, risk appetite informs thresholds for KYC, transaction monitoring, pep sanctions screening, and fraud controls.Regulators require institutions to articulate and monitor risk appetite to ensure it aligns with regulatory obligations and business sustainability. A strong risk appetite framework balances growth opportunities with compliance expectations. It is continuously reassessed to adapt to emerging threats, regulatory changes, and market conditions.
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