by Michele Wucker, Strategy+Business
Understanding people’s tolerance for and approach to risk can help companies build teams and improve decision making.
There’s something of a bull market in understanding attitudes toward risk. Last decade’s financial crisis spawned a slew of platforms — Riskalyze, FinaMetrica, Tolerisk, and a rapidly growing list of competitors — that seek to understand people’s tolerance for financial risk. It is now common for financial advisors to ask clients a set of questions about how much money they’re willing to lose in exchange for the chance to make more. The advisors then use the answers to assign clients a risk number and match them to appropriate portfolios. The practice represents an important step in the evolution of thinking about risk."
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