A risk strategy defines how an organization or individual plans to identify, assess, and respond to risks in order to achieve objectives and minimize negative outcomes. It acts like a blueprint for managing uncertainty. Strategfic risk approach would entail multiple steps such as: Risk Appetite & Tolerance Risk appetite: The level of risk you're willing to accept to achieve company objectives Risk tolerance: The acceptable variation from your objectives and would have specific limit defintions that have to be qualitatively and quantitatively defined. This can be in the form of quant measures such as Sharpe ratio, drawdown ratio, Credit limit or market limit sets.