Since risk is a reality in business, and ‘certainty’ is an extremely expensive proposition, an enterprise’s appetite for risk has always been measured on a sliding scale. Companies with a low appetite for risk prefer steady predictability to meteoric growth. Companies with a high appetite for risk are willing to experiment and even accept the possibility for failure in pursuit of huge returns. The diversity of global companies and industries allows for both appetites; the question for each leadership team is what their current appetite is and how that affects short term decisions vs. long term planning.
There are many factors that go into determining a company’s risk appetite. Even the most straightforward decisions, such as the background of a job candidate or an alternate component design will be made based on the internal culture around risk.
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