- At a quantitative level, Risk = Probability X Impact. While this is a generally accepted formula, it is imperative for us to understand the risk tolerance and proclivity of each individual. While several advisors are content to reach a general classification of an individual either being averse or eager to embrace risk, we follow a more objective and scientific approach to create a risk profile that includes a Risk management plan and a Risk response plan.
At MaxSurge, we perceive Risk as a virtue and a vice both. This duality presents a challenge to
as well as an opportunity to exploit. In simpler words, we discuss threadbare, the positive and
impact of a financial decision. Accordingly, we make suggestions that are dovetailed into the Risk
profile of the individual.
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Why should your risk profile be revisited periodically?
- Appetite and aversion to risk evolves and changes over time. A higher discretionary income could result in an increase in the appetite whereas an addition to the family may curtail such an appetite.
- Revisiting your Risk profile is like a paying a visit to your physician to reassure yourself.
- External risk factors are an important stimulus that could have an impact on your planned course of action. This could be due to a change in the laws, regulatory framework, taxation, compliance and several such factors.
- Financial Risks are a reality; however, ignoring the need to plan your finances is the biggest Risk.