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ARTICLE · 09 JULY 2013

Risk Appetite Frameworks - How To Spot The Genuine Article

Deloitte
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Everyone these days seems to agree that risk appetite frameworks are good things, even if no-one can quite agree what a good one looks like.

United KingdomFinance and Banking
Deloitte Financial Services Group
Deloitte Financial Services Group
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Background

Everyone these days seems to agree that risk appetite frameworks are good things – even if no-one can quite agree what a good one looks like.

The regulatory landscape for banks– be it speeches, working papers and draft or final regulation – is full of references to risk appetite, its benefits, uses, applications and case studies of failed firms whose weak risk appetite frameworks played a part in their downfall.

When firms are criticised for shortcomings in their risk governance and management, an appetite framework is commonly prescribed as a cure by regulators. And yet, there remains a surprising variety of opinion about what it actually means for banks to establish and embed a proper risk appetite framework.

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