The risk ante rate is the basic "cost" of being "in the game." It is the risk price of entry.
As an example, if it is decided to open up a university campus that will welcome thousands of faculty, staff, students, and the public, then although the campus will be built to all appropriate codes, and although all reasonable efforts will be made to protect stakeholders from harm, one may expect some proportion of risk events nevertheless--for example, slip-and-fall accidents.
This proportion of risk events represented by the ante rate is theoretically the proportion found in the society at large for that type of organization in that culture. The ante rate, when viewed as a baseline, is helpful for understanding what additional controls and other measures to put into place. These decisions can be made based on the organization's risk appetitie vis-a-vis the general society's for a certain type of risk; or they can be made based on an understanding that, owing to the unique nature of the organization, the proportion of certain types of risk events is higher than found in the society at large.
The following figures illustrate the concept of the ante rate.
ANTE RATE RISK VS. INHERENT AND RESIDUAL RISK
The ante rate is not the same as inherent risk; but it is a kind of residual risk. Inherent risk is the potential for risk events that could occur as a result of undertaking some activity when there are no controls in place. Once controls are put into place, the residual risk is the remaining risk. Residual risk is the level of risk after controls have been implemented. The residual risk is then compared agains risk tolerance to determine if more controls are warranted or if the residual risk is acceptable to the organization.
The ante rate is a kind of residual risk in that it is a level of risk that exists net of controls; it presumes that certain controls are in place. What distinguishes the ante rate from residual risk is its point of departure, or place, in the risk discussion: It is the baseline or setting that is already in place when decision-makers begin a discussion about whether to enter into a new venture, partnership, business line, or collaboration. It helps organizations understand their risk appetite and appropriate level of controls related to the new opportunity.
Example of Applying the Ante Rate
If a university is considering a program that would involve sending students to study in foreign countries, the ante rate of risk includes the risks inherent in any kind of foreign travel, such as aviation or in-country automobile accidents. A consideration of the ante rate clarifies the baseline level of risks of the program; and the first question the program developers can ask is, "Are we willing to accept that basic level of risk?"
The next question would be to understand the inherent riskiness of the specific country or countries to be visited, and compare that riskiness against the organization's risk appetite for the specific categories of risk that apply (health-safety, financial, operational, reputation, strategic). For some countries, the inherent risk will rise above the average ante rate for international travel to more developed countries; and program administrators will need to determine if that risk rises above their risk appetite. If so, they will need to determine their risk treatment (mitigate, avoid, share, transfer), and based on the treatment, how to mitigate the risks to an acceptable level and, perhaps, share the risks with the people travelling and with insurers.