Definition Of Risk Tolerance
Degree to which an entity asset system network or geographic area is willing to accept risk.
Definition of risk tolerance. Risk tolerance is defined as the amount of risk the investor can tolerate before deciding to exit the market and usually depends on the investor s financial situation type preference of asset class time horizon and purpose of investments. Let s start with a clear definition of risk tolerance. See the dictionary meaning pronunciation and sentence examples. It is an important component in investing.
Risk tolerance is the degree of variability in investment returns that an individual is willing to stand. Dhs risk lexicon u s. Department of homeland security 2010 edition. After a disaster a community s risk tolerance may decrease.
Risk tolerance is essentially how much risk one is willing to take on where their investments are concerned. The level of risk an entity is willing to assume in order to achieve a potential desired result. 3 people chose this as the best definition of risk tolerance.