Balancing risk appetite and risk tolerance in humanitarian operations


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Understanding and appropriately applying the concepts of risk tolerance and risk appetite is crucial for humanitarian organizations to ensure that they are operating within their ability to manage risk. Humanitarian action is taking place in inherently high-risk environments and humanitarian organizations are often under pressure to take on most of that risk under the current structure of funding agreements. The concepts of risk tolerance and risk appetite are particularly important for humanitarian actors to understand in order to shift from the current state of risk transfer in funding agreements to a more equitable sharing of risks among stakeholders in humanitarian operations.
On 8 September, ICVA and PHAP had a webinar focusing on the twin concepts of risk tolerance and risk appetite. Following an introductory briefing on these concepts, we discussed with a panel of experts the practical challenges in identifying risk appetite and tolerance for NGOs. This was the second event of the Learning Stream on Risk Management in Practice, aimed at exploring the current state of risk management in the humanitarian sector.

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