What Is Risk Profiling?

A2Risk’s ATRQ System measures risk tolerance, which in the financial planning process is the measure of how much investment risk the investor is willing and able to take.

  • Attitude to risk – is the client’s psychological willingness to take risk
  • Need to take risk – is the client’s need to take risk based on their investment goals and time horizon.
  • Capacity for loss – is the client’s financial ability to bear risk and cope with adverse outcomes. It relates to investment horizon, and the level of income, assets and liabilities.

All of these factors are important in the financial planning process. A2Risk’s ATRQ System measures attitude to risk while need to take risk and capacity for loss are typically assessed in the financial fact find, and in discussing with the client the range of possible outcomes from proposed investment portfolio.

Model of risk tolerance in investment decision making

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