Glossary
Risk Profile
A Risk Profile summarises an investor's individual risk capacity and risk tolerance. Risk capacity describes the objective financial ability to absorb losses; risk tolerance describes the subjective willingness to do so. Together, both dimensions form the basis for the Suitability Assessment and the design of an investment mandate.
At a glance
- Risk capacity and risk tolerance can diverge significantly: an investor with high financial capacity may nonetheless have a low willingness to tolerate fluctuations.
- The Risk Profile must be reviewed regularly and adjusted when there are material changes in the client's personal circumstances.
- Simplified profiling requirements under FinSA apply to professional clients and institutional investors.
Frequently asked questions
When there is a significant divergence, the lower of the two dimensions is generally decisive. If, for example, a client has little loss buffer (low risk capacity) but expects high returns (high risk tolerance), the objective risk capacity is the determining factor. Otherwise, the Suitability Assessment under Art. 12 FinSA would not be correctly satisfied.
Part of the topic
Finanzberatung
Sources: FINMA · Systematische Rechtssammlung (fedlex)