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2. Risk Governance

c. define risk governance and describe elements of effective risk governance;

## d. explain how risk tolerance affects risk management; ## e. describe risk budgeting and its role in risk governance;

What are two useful approaches to ensure a strong risk governance framework? 1. Employ a risk management committee. 2. Appoint a chief risk officer.

What is risk tolerance? Risk tolerance, a key element of good risk governance, establishes an organization’s risk appetite.

What is risk budgeting and how does it relate to risk tolerance? While risk tolerance determines which risks are acceptable, risk budgeting decides how to take risks. It is a means of implementing risk tolerance at a strategic level.