Investors are put into broad categories based on their willingness to take risk to achieve higher returns. This information is then used to select the appropriate investments for their profile.
A graph with the value of an underlying asset on the x-axis and the value of a position exposed to risk in the underlying asset on the y-axis. Also used with changes in value. (Contrast with payoff profile.)
The slope of a line graphed according to the value of an underlying asset on the x-axis and the value of a position exposed to risk in the underlying asset on the y-axis. Also used with changes in value. See: Payoff profile.
An assessment of the degree to which an investor is prepared to accept losses at the expense of potential gain.
An image of risk due to all of the potential harms associated with a hazard. A risk profile may be a series of point values if the risk perceiver's attitudes require complete disregard of uncertainty. Otherwise, a risk profile is an area in frequency/adversity space enclosed by uncertainty bounds.
Risk profiles can be low, medium or high. A careful assessment of your individual financial status and needs is required before any of these models are applied to your portfolio. Portfolios can be managed for pure capital growth or a balance between growth or income.
The FT has assigned to each fund a Risk Profile. Funds that share a Risk Profile are exposed to similar risks and the profile gives an indication of the type of investment the fund is making. Funds most heavily exposed to a particular country or region are grouped together, as are funds most heavily exposed to a particular industry or investment strategy.
This relates to how much risk you are prepared to take with your money. Generally the more risk you take, the higher the potential gain but the more likely it is that you could lose some or all of your capital*. Your risk profile may depend on your financial circumstances, as some people are able to take more risk than others. If you are unsure of your risk profile you should contact an independent financial adviser* for assistance before making an investment.
measuring an investor’s attitude to risk