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In business, risk is necessary. Risk is inherent in all of a company’s efforts to execute and to meet its goals. The amount of risk a company takes on determines how flexible it can be; how easily it can meet a particular growth target; and which measured, transparent, and calculated approach it should use to get to that target. So, in effect, an organization’s tolerance—or appetite—for risk determines how far it’s able to go based on market conditions and the external environment.

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