Who is best suited to determine an enterprise's risk appetite?

Determining an enterprise's risk appetite is a complex task that involves understanding the organization's strategic goals, its operating environment, and the various risks it faces. The steering committee is typically composed of senior executives and key stakeholders who have a comprehensive view of the organization's objectives and priorities. This group is well-positioned to evaluate the risks that the enterprise is willing to accept in order to pursue its goals.

The steering committee can draw upon a range of expertise within the organization to assess how different types of risks align with the overall business strategy. They consider factors such as financial implications, regulatory requirements, and the potential impact of risks on the organization’s reputation and operational efficiency. By encompassing a broad spectrum of perspectives from various departments, the committee can arrive at a well-informed consensus on the enterprise’s risk appetite.

In contrast, other roles like the chief legal officer may focus primarily on compliance and legal risks, security management would inherently be more concerned with safeguarding information assets, and the audit committee primarily oversees financial reporting and internal controls. While these positions contribute valuable insights, they do not possess the holistic view necessary to establish the organization's overall risk appetite effectively.