Risk Tolerance is a very important tool for leadership teams and often regulators to define risk mitigation objectives. The lower the Risk Tolerance is relative to the risk exposure of an organization, the more work needs to be done by the risk management teams. This video focuses on a few very critical aspects of Risk Tolerance. Leadership teams should always check the reasonableness of their Risk Tolerance requirements both in absolute terms and, more importantly, in relative terms comparing it to the Market Capitalization, Total Invested Capital, or Enterprise Value of the business. Even more important consideration is that using a low Risk Tolerance to motivate risk teams to plan and execute more Risk Mitigation Investments, leadership teams should also be ready to approve funding for these investments. It may require significant resources to mitigate the risk to the level defined by an aggressive Risk Tolerance.