What does risk profile mean?
Classification of an individual’s acceptable level and ability to take risks. The individuals risk profile will have a relevant impact on their investment portfolio allocation and the financial planning strategy recommended.
The risk profile is created to identify the individual’s willingness to take risks and help to select a suitable selection of investment products. From the adoption of the PRIIPS, product providers are obliged to make available a Key Investment Document (KID). The KID document should include clear information about the risk and reward profile of the product. When creating a financial planning strategy, the risk of the products advised should be aligned with the risk profile of the individual.