risk profile

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Risk 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.

Risk Profile

1. A measure of how risk averse an investor is. One may conduct a risk profile to determine what securities will likely fit an investor's investment goals.

2. In options, a chart showing the profits and losses on a contract over time. It is created by plotting the value of the underlying asset on the x-axis and the risk on the y-axis. It is also called a payoff profile.

risk profile

The degree to which various risks are important to a particular individual.
What questions should I ask myself as I prepare to develop my risk profile?

Ask yourself when you plan to use your investment—in a few years to buy a home, start a business, or pay for college, or in the future for retirement. After you have decided how long your money will work, the focus of your preparation should shift to personal preferences:

  1. Is capital preservation more important to you than outpacing inflation?
  2. Are you willing to accept fluctuating values when investing for the long term?
  3. Are you more comfortable with dividends and income, or with growth through capital appreciation?
  4. Will you accept above-average risk to generate above-average returns?

Mark G. Steinberg, President, Trabar Associates, Boston, MA
References in periodicals archive ?
We could revise the outlook to stable if Warba fails to build on recent improvements in its ERM practices, or if either its business risk or financial risk profiles deteriorates from current levels, for example, because of lower-than-expected earnings or a continuing very high exposure to equity instruments.
The rater has combined the business and financial risk profiles of Shree Alloys and its group company Aquatech Steelcon Pvt Ltd to assign the ratings.
Constructing risk profiles is closely related to enterprise risk management.
Giving patients with diabetes printed reports with individualized cardiovascular risk profiles helped the patients improve their cholesterol levels in a randomized study.
Customers can tailor the system with specific risk profiles for each part of their business to ensure the business impact analysis is uniquely relevant to their individual needs.
Although not directly focused on the issue of hedge funds, international efforts to enhance public disclosure of financial institution risk profiles may also provide meaningful input.
For arriving at its ratings, CRISIL has consolidated the financial risk profiles of RAIL, Vishal and Company, and Shri Vishal Agro Trade Syndicate (SVAT).
CRISIL believes that the company will maintain its business and financial risk profiles at the improved level over the medium-term.
CRISIL believes that Amrit Bottlers will maintain stable business and financial risk profiles over the medium term on the back of its exclusive franchisee agreement with Coca Cola India Pvt Ltd.