Which of the following is not the purpose or benefit of a Risk Appetite statement?

Risk Appetiteis theamount of risk an organization is willing to take to achieve its objectives.

ARisk Appetite Statement(RAS) communicatesrisk tolerance levels and management expectations.

Risk Capacity(not Risk Appetite)defines the maximum risk the firm can withstand.

Risk Appetite is about willingness to take risk, not the absolute limit.

Option A ("Improves risk management standards")→Correct, as RAShelps define better risk management.

Option B ("Governing body articulates expectations")→Correct, as RAS isapproved by the board.

Option D ("Assists strategic discussions")→Correct, as RASguides decision-making.

Step 1: Understanding a Risk Appetite StatementStep 2: Why Option C is IncorrectStep 3: Why the Other Options Are Correct

PRMIA Risk Appetite Framework– Differentiates between Risk Appetite and Risk Capacity.

Basel III Governance Principles– Encourages organizations to establish clear risk appetite statements.

PRMIA Risk References Used:

Final Conclusion:Risk Appetite does not establish the maximum risk the firm can withstand—that isRisk Capacity, makingOption C the correct answer.