F0487: Risk Appetite Governance Decision Framework

Context

Context: Decision frequency is high, but inconsistent definitions of VaR and equity ratio weaken accountability. Under regulatory constraints, delayed decisions directly reduce execution windows. A one-page standard is required so stakeholders can evaluate options quickly while preserving traceability and governance.

Options

• Option A: Keep the current operating model to avoid near-term disruption. This minimizes immediate change effort, but limits the upside and slows structural learning.
• Option B: Deploy in phases, track VaR and equity ratio, and expand scope only after evidence is confirmed. This balances risk and execution speed.
• Option C: Replace the existing model through one comprehensive rollout. Potential upside is high, while implementation volatility and change fatigue also rise.

Decision

Decision: Move forward with Option B. Use a pilot-first sequence with explicit stage gates, and postpone broad rollout until evidence confirms repeatability.

Rationale

Rationale: Option B provides measurable learning while staying within regulatory constraints. It supports progressive adjustment of the return pursuit vs downside protection balance, improves stakeholder alignment, and limits downside if assumptions fail. The phased structure also reduces coordination overhead and strengthens repeatability for future decisions.

Risks

• Weak instrumentation makes it impossible to compare outcomes and undermines the credibility of the decision process.
• If ownership and deadlines are unclear, execution drifts and teams revert to siloed decision criteria.

Next

Next actions: Document pilot constraints, responsible approvers, and evidence requirements. Prepare monthly decision reviews and corrective action playbooks.