Risk Misunderstood: From Risk Appetite to Risk Responsibility and Resilience

Risk management is highly developed at institutional level, but remains less capable of recognising risks created, shifted or left unmanaged across interconnected systems. This paper examines that gap in the context of regenerative agriculture and transition finance. It distinguishes risk appetite, risk responsibility, risk allocation and risk resilience, and introduces the Risk Mandate & Allocation Framework (R-MAF) as a way of making these dimensions explicit. The framework asks what an institution is mandated to protect, which harms it should not create, finance, enable or shift, which risks it can realistically carry or reduce, who benefits from successful transition, and what risks it can absorb. The paper argues that transition risk cannot be understood solely at transaction level: risk may move between farmers, financial institutions, markets, public authorities and the wider food system without disappearing. It proposes a broader risk architecture capable of examining both institutional responsibility and the resilience of the systems that finance supports.