Enterprise risk management experts, and surely even many neophytes, are fairly adept at identifying exposures and events that can impede their organizations. What is much more difficult is measuring the potentially adverse impact of risks, making this the biggest X factor in the ERM process.
Consequently, it is quite challenging to determine how much risk exposure an organization can "tolerate"–that is, the extent of adverse risk impact a company can absorb so that the attainment of its goals will not be jeopardized.
It is equally difficult to assess a company's "threshold" to absorb these risk consequences–that is, the cross-over points beyond which significant strategic and operational changes need to be made.
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