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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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(Meralco) to BB- from B+ due to the utility's improved business and financial risk profiles.
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Constructing risk profiles is closely related to enterprise risk management.
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-- Giving patients with diabetes printed reports with individualized cardiovascular risk profiles helped the patients improve their cholesterol levels in a randomized study.
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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.
It neutralises differences in health insurers' costs that are due to variations in their risk profiles. The Health Insurance Authority will administer disbursements from insurers with particularly health risk profiles in favour of those with less favourable profiles.
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.
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"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."