Risk Appetite
The amount and type of AI risk an insurer is willing to accept, expressed as thresholds for deployment, testing, and oversight.
Risk appetite is the amount and type of risk an organization is willing to accept in pursuit of its objectives. In AI governance, risk appetite defines which AI systems can be deployed, what testing is required, and what level of human oversight is needed.
A written AI risk appetite statement is part of a strong AI Systems Program. It should connect to the company’s overall risk appetite and should be specific enough to guide decisions. For example, it might say that no AI system may deny a claim without a documented human review, or that all high-risk models must pass bias testing before deployment.
The AI governance committee is usually responsible for setting and reviewing risk appetite. See our glossary entries on the AI Systems Program, risk tiering, and the governance committee.