Gosling's Grouse: How do you measure risk on behalf of clients?

Challenging environment

clock • 2 min read

We have a whole industry devoted to the financial measurement of risk and a regulator that seems to think it is sufficient to put a number against it.

You can guess from my slightly cynical tone I am not a great fan of this system of apparently matching an investor's 'risk appetite' with a financial product.  Quite simply, risk for me is measured with an answer to the question of an individual's capacity for 100% loss of capital and the possibility of that happening with an investment over a given time period.  For example, if an investor puts money into the UK or US main equity markets with both at record highs, then the next move for those indices is 50:50 either way. Is that a high or low risk investment?  Is the risk of an in...

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