In the world of RISK MANAGEMENT, what is the difference between: 1- Risk appetite. 2- Risk tolerance?

Wilingness to take risk (Risk apitite) in line with the theory of higher return with higher risk.

Potential /ability to take risk (Risk tolerance)

Risk appetite: is the amount of risk an entity is willing to accept in pursuit of value. It is strategic guidepost in strategy setting.

Risk Tolerance: is the acceptable level of variation relative to acheivement of specific objective, and often is best measured in the same units as those used to measure the related objective. risk tolerance is tactical.

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• Risk tolerance: the specific maximum risk that an organization is willing to take regarding each relevant risk.

• Risk appetite: the amount and type of risk an organization is willing to accept in pursuit of its business objectives. it is related to the company stratigic (board & exective)

Risk appetite is a higher level statement that considers broadly the levels of risks that management deems acceptable while risk tolerances are more narrow and set the acceptable level of variation around objectives.

To explain it simply, risk appetite is broader statement than risk tolerance. Risk tolerance is more specific.