# Risk Appetite

*Risk & Portfolio — Finicade finance glossary*

Risk appetite is the amount and type of risk a firm's board has decided it is willing to take in pursuit of its strategy. Done properly it cascades into hard limits per desk and product, so the abstract statement binds someone's actual position. Done badly it is a paragraph in an annual report that no trader has read, which is the state most such statements were in before 2008.

**Also known as:** risk appetite statement, risk tolerance framework

**Related terms:** [Risk Budgeting](https://finicade.com/glossary/risk-budgeting), [Risk Taxonomy](https://finicade.com/glossary/risk-taxonomy), [Economic Capital](https://finicade.com/glossary/economic-capital), [Three Lines of Defense](https://finicade.com/glossary/three-lines-of-defense), [Risk Tolerance](https://finicade.com/glossary/risk-tolerance)

Source: https://finicade.com/glossary/risk-appetite