A risk profile recognizes the adequate level of risk an individual is prepared and able to accept. A corporation's risk profile attempts to determine how a willingness to take risk (or repugnance to risk) will affect an overall decision-making strategy.
Risk profiles is created in a number of ways, but usually begin with a risk profile questionnaire. All risk profile questionnaires score an individual's answers to various inquiring questions to come up with a risk profile, which is later used by used by financial advisors, both human and virtual, to help contour an individual's portfolio Asset allocation. This asset allocation will reliably concerned the risk in the portfolio, so it is important that it aligns well with the individual's risk profile.
An investor makes investments in order to accomplish assured financial goals. A risk profile helps an investor understand how much risk they can take vs how much risk they should take to achieve their goals.
There are various risk profiling tools that are available online and you can use them to get your risk assessment done. Upon completion you will be put into one of the risk containers depending on your responses to the given questions (e.g. low risk taker, medium risk taker and high risk taker). Once you know your risk profile you can concluded what kind of investor you are, what kind of returns you should expect from your investment portfolio and what kind of investment portfolio you should have.
Level of financial risk that an investor can manage contentedly based on his/her life situation (e.g. risk competence will be higher for a young salaried investor vs a middle aged man with two children). Investor's Adviser Objectives to understand where they are headed and their current resources to identify risks they may be required to take up to attain assured goals (e.g. invest in equities to plan for retirement).