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Taking a Bite Out of Risk Tolerance

Know your company's risk tolerance to drive an effective ERM program and avoid stagnation.

By Denise Tessier | Updated on November 16, 2012

Will you get pulled over if you are driving at 68 miles per hour (mph)? It depends. Are you in a school zone, where the speed limit is 20 mph, posted with a flashing yellow sign? Are you in a densely populated area where you are not supposed to go over 40 mph? Or are you on a highway, where the posted speed limit is 65 mph, but you know that your state police patrol is fairly lenient, and won’t pursue cars passing under 75 mph?  

In and of itself, the fact that you are going 68 mph isn’t necessarily bad when considering the risk of a potential legal violation. Rather, the amount of risk in getting pulled over during your travels is entirely dependent on the external guidelines and tolerances for speeding set by local authorities under a set of particular circumstances, or in a specific environment. It is a measurement of risk set against the community’s tolerance for the risk of speeding – the maximum speed the community is willing to accept on that particular road.  

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