Basic definition of risk preference

The concept of risk preference is based on the concept of risk tolerance. Aiming at the risks faced in the process of enterprise goal realization, the risk management framework puts forward two concepts of risk preference and risk tolerance in enterprise risk management.

Risk preference in a broad sense refers to the amount of risks that enterprises are willing to accept in the process of achieving their goals. The concept of risk preference is based on the concept of risk tolerance.

Risk tolerance refers to the acceptability of differences in the process of achieving enterprise goals, and it is the tolerance limit of differences in the process of achieving related goals set by enterprises on the basis of risk preference.