What Does Risk Tolerance Mean?

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What does Risk Tolerance mean? Read on to discover the definition & meaning of the term Risk Tolerance - to help you better understand the language used in insurance policies.

Risk Tolerance

Risk Tolerance

The willingness of an organization to incur risk to gain future reward. In insurance, risk tolerance may be evidenced by a willingness of the insured to increase deductibles or self-insured retentions (SIRs). Alternative risk transfer is used by insureds with low risk tolerance and the corresponding desire to reduce the uncertainty arising from purchase of commercial insurance. Compare to Retention Ability.

We hope the you have a better understanding of the meaning of Risk Tolerance.

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