From the course: IT and Cybersecurity Risk Management Essential Training
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What is IT risk tolerance?
From the course: IT and Cybersecurity Risk Management Essential Training
What is IT risk tolerance?
- [Narrator] Risk tolerance is a more specific, measurable form of a risk appetite statement. It's the amount of loss an organization is willing to experience given their existing assets and the other risks that they face. In the financial world, risk tolerance is almost always represented in limits that are measured in dollars, euros, yen, or pounds. For example, a company says in their risk appetite statement that it doesn't accept risks that could result in a significant loss of its revenue base. The company may further define their risk tolerance by saying it doesn't accept risks that would cause total revenue from its top 10 customers to decline by more than 10%. That's a $100 million limit if the revenue of their top 10 customers is $1 billion. But for IT risk, your organization's tolerance is difficult to quantify and manage using money as the primary measurement. Some companies are able to do it, and they're…
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