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risk treatment within a risk management system

2.11 Risk Profile—The risks to which an organization is exposed over a specified period of time. 2.12 Risk Tolerance—The aggregate risk-taking capacity of an organization. 2.13 Risk Treatment—The process of selecting actions and making decisions to transfer, retain, limit, and avoid risk. This can include determining risk tolerance, choosing risk appetites, setting risk limits, performing risk mitigation activities, and optimizing organizational objectives relative to risk. Section 3. Analysis of Issues and Recommended Practices 3.1 Risk Treatment—An actuary may be called upon to perform a variety of risk treatment activities. In performing services related to risk treatment, the actuary should consider, or may rely on others who have considered, the following: a. information about the financial strength, risk profile, and risk environment of the organization that is appropriate to the assignment. Such information may include the following: 1. the financial flexibility of the organization; 2. the nature, scale and complexity of the risks faced by the organization; 3. the potential differences between the current and long-term risk environments; 4. the organization’s strategic goals, including goals for the level and volatility of profits, both short term and long term; 5. the interests, including the risk/reward expectations, of the relevant stakeholders. These stakeholders may include some or all of the following: owners, boards of directors, management, customers, partners, employees, regulators and others potentially impacted by the organization’s management of risk; 6. regulatory or rating agency criteria for risk levels and the implications of potential risk levels on the continuation of business operations as reflected in ratings or other external measures of security; 7. the degree to which the organization’s different risks interact with one another, actual and perceived diversification benefits, and dependencies or correlations of the different risks;