Energy Risk Appetite

Definition

Energy Risk Appetite (also Energy Risk Tolerance) is the set of explicit internal organization statements that capture the degree of Energy Risk the entity is willing to accept while pursuing its Business Model. It denotes total amount and type of energy risk that an organization is prepared to accept, tolerate, or be exposed to at any point in time.

Energy risk appetite statements must in general be translated into concrete policies, practices and management frameworks. Energy risk appetite frameworks came to prominence in the context of the Energy Transition and the possibility of an Energy Crisis. It is a high level element of the broader / more detailed Energy Risk Framework. A energy risk appetite statement might entail

• cover all the material energy-related risks to which and entity is exposed.
• be linked to the Energy Risk Strategy of the entity
• be integrated in its decision-making processes and Energy Risk management, and
• be aligned with the entity's Business Plan and investment / capital planning

See Also

• Energy Risk Profile
• Risk Appetite