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Establishing the context > Establishing the context - Pg. 83

Risk Management Framework 83 internal context. This may be considered to be the strengths and weaknesses within the organization. External context is the environment within which the organization exists. This environment will include consideration of the business sector within which the organization operates, external stakeholders and their expectations and the external financial environment. This may be considered to be the opportunities and threats facing the organization. The nature and extent of the risk management process is a major consideration when establishing the context for risk management. The key question is what the risk management process is expected to achieve or the answer to the question of why the organization has risk management activities in place. The risk management context also includes consideration of who will be responsible and identifies the resources that will be required in order to fulfil risk management activities. Another important consideration within the risk management context is the establishment of risk appetite or risk criteria. This will help the organization decide what controls should be put in place and whether the residual current level of risk is acceptable. The risk management context should also provide a means of establishing the overall total risk exposure so that this can be compared with the risk appetite of the organization and the capacity of the organization to withstand risk. The internal context is about the culture of the organization, the resources that are available, receiving outputs from the risk management process and ensuring