ØRisk appetite is
the amount (or range) of risk, which is treated as acceptable and justifiable
by the bank. It differs according to the environment within which the bank
operates. It should be dealt with keen consideration while developing the
policy of NRB. In setting a risk profile and risk tolerance level, NRB
examines all the risks compatible including those arising from off-balance
sheet transactions.
ØBank should express
risk appetite as a series of boundaries appropriately authorized by the bank’s
executive management. The employees at all levels should be informed of risk
appetite through the clear guidance by management.