A company with a large risk appetite would do which of the following?

A company's risk appetite defines the level of risk it is willing to accept in pursuit of its strategic objectives. A large risk appetite signifies a 'risk-seeking' culture, where the organization is prepared to take on significant risks for the potential of high returns. This is not about taking every risk indiscriminately, but rather making a calculated decision that the potential rewards ("win") are likely to outweigh the potential negative consequences ("loses"). This approach is common in industries focused on innovation and high growth, where significant investment and uncertainty are necessary to achieve a competitive advantage.

A. take all risks: This is reckless and not a strategic approach. A large risk appetite is still managed; it does not mean accepting risks with no potential for commensurate reward.
C. take few, well calculated risks: This describes a low risk appetite or a 'risk-averse' culture, where the focus is on caution, certainty, and minimising potential losses.
D. avoid taking risks: This describes a 'risk-averse' stance, which is the direct opposite of having a large risk appetite. This strategy prioritises security over opportunity.

1. CIPS (Chartered Institute of Procurement & Supply). (2018). Managing Supply Chain Risk (L5M2). Profex Publishing.

Chapter 1

Section 3

"Risk appetite and tolerance

" explains that risk appetite is the amount of risk an organisation is prepared to take. A high or large appetite is characteristic of 'risk-seeking' organisations that pursue high rewards

which aligns with the cost-benefit logic in option B.

2. COSO (Committee of Sponsoring Organizations of the Treadway Commission). (2017). Enterprise Risk Management—Integrating with Strategy and Performance.

The Executive Summary and subsequent chapters define risk appetite as "The types and amount of risk

on a broad level

an organization is willing to accept in its pursuit of value." An organization with a large appetite accepts a higher level of risk to achieve potentially higher returns

directly supporting the principle of winning more than losing.

3. Fraser

J.

& Simkins

B. J. (Eds.). (2010). Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow's Executives. John Wiley & Sons.

Chapter 5

"A New Approach to Setting Risk Appetite

" discusses how risk appetite links strategic objectives to risk-taking. A high appetite is explicitly tied to strategies where significant risk is undertaken for the prospect of significant returns

a concept encapsulated by option B. (DOI: https://doi.org/10.1002/9781118267139)