Definition:
Risk Tolerance refers to the degree of uncertainty or variability in risk that an organization is comfortable with while still pursuing its objectives. Unlike risk thresholds, which define a strict limit, risk tolerance is more flexible and varies between industries, projects, and stakeholders.
For example, a startup company working on an innovative AI tool may have high risk tolerance, accepting market uncertainty, while a pharmaceutical company developing a life-saving drug may have a low risk tolerance, requiring rigorous testing and compliance before launching a product.
