Case study 1: Defining Acceptable Boundaries in Health Care One non-profit health care organization considers its risk position in terms of boundaries. The combination of risk tolerance and risk appetite represents the organization's "risk position" and demonstrates the degree of established commitment the organization has towards achieving its goal or expected outcomes. For this organization, risk tolerance is understood as the degree the organization is comfortably willing to absorb as potential losses in the pursuit of its goals, objectives and expected outcomes. Conversely, risk appetite is the degree the organization is willing to securely invest to exceed such measures. As such, it is important for the organization to pre-establish boundaries and set limits. Risk tolerance and appetite limits are set and act as triggers. This allows the organization room to react and reset a course of action when outcomes fall too far below or ahead of expectations. By monitoring results against the limits, the organization can determine when it begins to trend too quickly towards maximum tolerances (before reaching a "black swan" killer) or maximum appetites (when the pursuit of the "golden goose" no longer makes sense given the investment required). These boundaries are preferably set in the aggregate but have been set against individual objectives, as well.

QUESTION ONE (BASED ON CASE STUDY 1: DEFINING ACCEPTABLE BOUNDARIES IN HEALTH CARE) [25] 1.1 With reference to the case study, differentiate between risk probability, impact and exposure. (9) 1.2 In your opinion, how does risk probability, impact and exposure affect risk management? (5) 1.3 Evaluate sustainability as a risk management issue. (7) 1.4 Comment on the significance of acceptable boundaries in risk management. (4)