Respond: The fourth and final step is to respond to the risks. This step involves implementing the strategies developed in the previous step in order to mitigate or avoid the identified risks.

Risk Appetite

Risk appetite is the amount of risk that an organization is willing to take in pursuit of its objectives. It is important to note that risk appetite is not the same as risk tolerance. Risk tolerance is the maximum amount of risk that an organization is willing to accept. Risk appetite, on the other hand, is the amount of risk that an organization is willing to seek out.

Organizations typically have different risk appetites for different types of risks. For example, an organization might have a high appetite for financial risks but a low appetite for regulatory risks. Risk appetite is typically influenced by a number of factors, including the organization's culture, business model, and strategic objectives.