Risk tolerance and appetite are the expressions of the amount and type of risk that an organization is willing to accept in pursuit of its objectives. Risk tolerance is the acceptable level of variation that the organization is willing to allow for the outcome of its risk decisions. Riskappetite is the broad-based amount of risk that the organization is willing to accept in its activities. The primary objective of establishing an organization’s risk tolerance and appetite is to assist management in decision making, as they provide guidance and boundaries for the risk management activities and decisions. By establishing the risk tolerance and appetite, the organization can align its risk exposure with its strategic goals, optimize its risk-return trade-off, and enhance its risk culture and performance. References = CRISC Review Manual, 7th Edition, page 61.