Developing a Risk Appetite Measurement Model Based on a Qualitative Approach

Abstract

This study aimed to develop a comprehensive and multidimensional model for measuring risk appetite in listed companies through a qualitative approach and to identify the principal dimensions, components, and indicators underlying risk appetite measurement. This exploratory study employed a qualitative grounded theory approach. The study population comprised academic experts in accounting and financial management as well as industry specialists working in listed manufacturing companies. Participants were recruited through snowball sampling, and interviews continued until theoretical saturation was achieved, resulting in 16 expert participants. Data were collected through documentary and library research and expert interviews. The qualitative data were analyzed through systematic coding and constant comparison to transform interview data into concepts and higher-order categories. In the second Delphi stage, the extracted concepts and categories were returned to the experts for further review, confirmation, modification, and supplementation. The analysis demonstrated that risk appetite is a multidimensional and systematic construct that cannot be adequately assessed using a single indicator. The qualitative analysis yielded 89 concepts organized into 13 categories: organizational maturity, organizational factors, appropriate risk approaches, managerial practices, risk status, development of communications, improvement of the risk appetite framework, supervisory expectations, strategic monitoring and feedback, company-related risks, laws and regulations, going concern, and organizational development. The findings further indicated that effective risk appetite measurement requires the simultaneous consideration of risk capacity, existing and acceptable risk levels, key risk indicators, decision-making structures, information infrastructure, regulatory and environmental conditions, and formal risk-management frameworks. The proposed model indicates that risk appetite should be conceptualized as an integrated managerial and organizational mechanism assessed through a combination of quantitative and qualitative measures and aligned with organizational objectives, strategies, risk capacity, and decision-making structures. Its application may facilitate more systematic risk appetite assessment and strengthen risk-management processes in listed companies.