Use your own words to explain it, Please NO handwriting. NO copying. Thanks. Ris

Question

Use your own words to explain it, Please NO handwriting. NO copying. Thanks.

Risk perception is in the eye of the beholder and may be conceived as primarily a personal assessment of your external economic conditions and internal personality traits.

Think about the difference between risk tolerance and risk perception, and how it might influence your ability to make decisions and affect your opportunities.

Reflect on your own personal risk tolerance. What are the factors you would consider as an opportunity to pursue your business, professional or personal goals?

Explanation / Answer

Risk tolerance is amount of risk that a person is willing to take or accept to achieve some goal. Whereas, risk perception is more of cognitive activity consists of assessment of internal and external conditions. For example, asking a person about likelihood of investing money, is the risk tolerance, whereas, asking how he perceives the investing money, is the risk perception. When it comes to decision making and opportunities, it is important to understand the nature of risk which in turn helps in getting to know the risk tolerance levels and risk-taking behavior of an individual. For example, young age individuals are more risk tolerant than old age individuals to meet their investment goals. Risk tolerance offers a clearly stated risk to an individual whereas risk perception is more like an assumed risk.

If I consider some of the factors which helps in pursing the opportunity by looking into the personal goals and considering personal risk tolerance, are –number years of work experience and present age – So with more number of years and more of increase in age, I do have clarity on the how much time and money I have to invest and look for my retirement plans and investment needed.

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