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Governance, Risk, Audit & Privacy · Foundational

Risk Tolerance

Acceptable variation around objectives or risk appetite for a specific risk or category.

Definition

Risk tolerance sets measurable boundaries for individual risks or metrics within the overall appetite, such as maximum downtime or acceptable loss. It operationalizes appetite into thresholds that trigger escalation. Tolerance should never exceed risk capacity.

Example

The organization tolerates up to four hours of e-commerce downtime per quarter.

Exam tip

Tolerance is more specific and measurable than appetite.

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