Assessment of Risk
Understanding investment risk is the key to our management of each client’s portfolio. The starting point is always the accurate identification of a client’s risk profile which in turn considers both risk tolerance and capacity for risk. With our wealth of experience in this field, let us help you with investment risk management.
What we mean by risk attitude is each client’s willingness to risk a less favourable outcome in an attempt to achieve a more favourable outcome – this is the classic “risk/return trade-off”.
Risk capacity however is about the ability to sustain a less favourable outcome without compromising the original goals and timescales. As a result, risk capacity is affected by:
- Time horizons and the extent to which they can allow for the recovery of falls in value
- Total wealth, which can act as a cushion to adverse outcomes
Further information about Financial Planning: