Client Risk Profiling
The difference between ATR and CfL, why CfL can override ATR, and how risk profiles link to asset allocation.
Client Risk Profiling
Understanding a client's relationship with risk is fundamental to making suitable investment recommendations. Risk assessment must consider both attitude and capacity.
True or false?
Understanding a client's relationship with risk is fundamental to making suitable investment recommendations
Attitude to Risk vs Capacity for Loss
Which term matches: "Psychological willingness to accept risk and potential losses (subjective)"
What does "Capacity for Loss (CfL)" mean?
Type the term that means: "Psychological willingness to accept risk and potential losses (subjective)"
Fill in the blank
______ — Ability to financially absorb losses without material impact on lifestyle (objective)
Risk Assessment in Practice
Which term matches: "standardised tools to assess ATR"
What does "Capacity for loss" mean?
Fill in the blank
______ — stress test the portfolio — can client afford a 20% loss?
Complex Risk Situations
What the exam tests
The difference between ATR and CfL, why CfL can override ATR, and how risk profiles link to asset allocation.
True or false?
The difference between ATR and CfL, why CfL can override ATR, and how risk profiles link to asset allocation