An organization's board has approved an expansion plan into a new market.

The board has approved the risk tolerance of the organization. Risk tolerance is the level of risk that an organization is willing to accept while pursuing its objectives before action is deemed necessary to reduce the risk. In this scenario, the board's acceptance of potential large monetary losses indicates their willingness to tolerate these losses in pursuit of expanding into a new market.

The IIA's guidance on risk management, specifically relating to defining and understanding risk appetite and risk tolerance.