Show questions and answers summary:
What is investor risk profiling?
It is the process during which you draw out detailed information to understand what an investor needs from their investments and to what extent they are comfortable with taking risk
What is the industry requirement for this - Is it simply a case of compliance or does it go deeper than that?
It started as a compliance concern – what a firm would have to undertake to assess their client’s risk profile, but there has been a lot of movement in this industry related to investor risk profiling. In 2011, the FSA (now FCA) released guidelines for advisors to assess the overall willingness of the individual to take risk and their capacity to absorb loss, which is linked to their specific circumstances and what they want to achieve.
How important is risk profiling?
It is important regarding compliance. Understanding the value and limitations of investor risk profiling is also important. The more information that you can provide to the investor which is contextualised in a format which they can understand, the better informed they will be about which investment formats are suitable.
What makes Oxford Risk different?
Firstly, the academic link with the University of Oxford, which informs and influences our work. We also have a particular focus on testing – our systems are perpetually tested to ensure they remain relevant and accurate.