Implementing Robust Risk Appetite Frameworks to Strengthen Financial Institutions (FRM P2–B3–Ch4)

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After completing this reading, you should be able to:
- Describe best practices for the implementation and communication of a risk appetite framework at a firm.
- Explain the relationship between a firm’s risk appetite framework and its risk culture, and between the risk appetite framework and a firm’s strategy and business planning process.
- Explain key challenges to the implementation of a risk appetite framework and describe ways that a firm can overcome each challenge.
- Assess the role of stress testing within a risk appetite framework, and describe challenges in aggregating firm-wide risk exposures.
- Explain the lessons learned in the implementation of a risk appetite framework through the presented case studies.