Glossary definition: Risk Profile

Understanding Your Risk Profile

Risk Profile is a term used to describe an individual's or organization's risk tolerance, which is the amount of risk they are willing to take in order to achieve a desired outcome. It is based on the individual's or organization's attitude towards risk and their capacity to bear risk. Risk profiles are used by financial advisors, insurance companies, and other professionals to assess the level of risk an individual or organization is willing to take in order to achieve a desired outcome. Risk profiles are also used to help determine the types of investments or insurance policies that may be suitable for a particular individual or organization. Risk profiles can also be used to determine the amount of money an individual or organization should set aside for contingencies or unexpected events.