Risk Tolerance Questionnaires Samples †MyAssignmenthelp.com

Question: Discuss about the Risk Tolerance Questionnaires. Answer: Risk tolerance can be defined as a persons psychological capability to work on some uncertainties. Most firms that deal with investments may use tolerance questionnaires to carry out assessment. These types of questionnaires are made up of several or few set of questions. Apart from focusing on risk tolerance, they also consider risks that arise from finances e.g. losses and investments. The fact that risk tolerance questionnaires are predominantly used does not mean it is taken to be a perfect source of questionnaires that perfectly deal with psychological tests does not mean it never faces criticisms (Keefe, 2017). The values of this risk tolerance are doubted, there are several questions revolving around risks it may cause and the anxieties present when the stock levels vary due to changes in investments. Although others view risk-tolerance questionnaires as one with stability of psychological trait, another criticism comes from Carri Pan (2012) and he says this method changes with conditions and it is prone to inaccuracies in measurements. The argument is that some important insights were but failed to find the real problems. It is important to note that there is need for better questionnaires with proper questions that can be used to judge how a person will behave when there are market uncertainties. Most of the questions within the risk tolerance questionnaires generally try to predict individuals thinking but failed to address the actual feelings of the individual. Additionally, such questions can be responded to through emotions, thereby presenting poor predictability to the feelings of an individual. Consequently, a person may not be in a position to provide an honest answer, especially if they are guilty about the steps they have taken. In conclusion, it is important to structu re better questions to improve the risk tolerance questionnaires and think broadly about the solutions for the problems that exist within the method. References Carri Pan. (2012).The Risk tolerance questionnaires. Higher Learning Research on Risk management, 6(4). Keefe, M. (2017). Risk Management through Mitigation strategy, evaluation, and impact. Higher Education, Skills and Work-Based Learning, 2(1), pp.33-44.