BANK 3.1.3 Guidance

1 A banking business firm's risk management strategy will usually refer to risk tolerance although risk appetite may also be used. The terms 'risk tolerance' and 'risk appetite' embrace all relevant definitions used by different institutions and supervisory authorities. These 2 terms are used interchangeably to describe both the absolute risks a firm is open to take (which some may call risk appetite) and the actual limits within its risk appetite that a firm pursues (which some call risk tolerance).
2 If the firm is a member of a financial group, the authority expects the capital of the financial group to be apportioned among the group's members, based on the allocation of risks between them.
Derived from QFCRA RM/2014-2 (as from 1st January 2015).