Risk Tolerance - Business concept of the day

Risk Tolerance - Business concept of the day

Business Development

GlobalLinker Staff

GlobalLinker Staff

1 Nov 2018, 15:28 — 2 min read

Definition: Risk tolerance refers to a degree of variability/deviation an investor/business owner is willing to take on a specific investment in anticipation of favourable outcomes. Often referred to as "Risk Appetite" in broader terms.


Example: Depending upon the degree of risk an investor/business owner is willing withstand, this can take multiple forms:

Aggressive Risk Tolerance: Usually savvy investors or business owners who have a very deep understanding, knowledge & experience of the business environment or the markets they are investing in. 

Moderate Risk Tolerance: Investors & business owners undertaking safe investment or business ventures. They are willing to take risk however have defined timelines for their exit if the outcomes are not favorable.

Conservative Risk Tolerance: Individuals who are willing to take very mild to no risk & undertake relatively safe opportunities like investing government bonds, blue-chip stocks or easy to execute ventures like franchises, distribution licenses etc. 


Business Insight: High risk tolerance is compensated by high return probabilities. 


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GlobalLinker Staff

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