What is Risk tolerance and how it help in project?

It is the degree, volume or amount of risk that an organization can withstand. It indicates how sensitive client, Contractor and people are towards risks. We can say that they are uncertain events that may influence the project both positively and negatively. Client, Contractor is willing to accept risks upto certain degrees only which we called as Risk Tolerance.

It help the project team to rank the severity of the risk.