Decision-making at its heart is a risk assessment – it involves weighing up the pros and cons of different possible courses of action, assessing the level of risk attached to each option and considering the opportunity cost. These considerations are much more difficult if you do not know how much risk you are willing to take.

“Risk appetite” is the level of risk a charity is willing to seek or accept during the pursuit of its aims and objectives. A risk appetite statement attempts to capture a charity’s risk appetite for each of its areas of operation – the statement is the output of a charity’s consideration of its risk appetite.