A-Z Popular Blog Risk Search »
Simplicable Guide

5 Examples of Risk Tolerance

 , July 24, 2015 updated on April 25, 2017
Risk tolerance is the level of risk that an individual or organization targets. Risk management doesn't always seek to minimize risk because risk taking is the basis for business and personal gains. Instead, the goal of risk management is usually to maximize risk-reward for a given risk tolerance. The following are a few examples of risk tolerance.

1. High Risk Investor

A high risk investor who is willing to tolerate potential losses of up to 50% of their portfolio in order to maximize their potential gains.

2. Low Risk Investor

A low risk investor who will not tolerate any potential loss of capital is restricted to relatively safe investments such as insured savings accounts that have limited potential returns.

3. High Risk Startup

A startup company is run by individuals with a high tolerance for risk. Although the business may fail, it also has potential to provide unusually high returns to investors.

4. Mega Projects

A mega project such as a large bridge may have very low tolerance for risk due to its large budget and responsibility for public safety. Such a project requires intensive risk management processes to ensure that its low risk tolerance is met.

5. Professional Snowboarder

Most professional snowboarders have a high risk tolerance because it's difficult to acquire superior snowboarding skills without taking any risks.

Risk Management

This is the complete list of articles we have written about risk management.
Acceptable Risk
Business As Usual
Business Impact
Business Risks
Calculated Risk
Cascading Failure
Contingency Plan
Contingency Planning
Disaster Preparedness
Dread Risks
Economic Risk
Financial Risk
Innovation Risk
Investing Risk
Plan Template
Political Risk
Positive Risk
Project Risk
Reputational Risk
Residual Risk
Resource Risk
Risk Acceptance
Risk Analysis
Risk Appetite
Risk Awareness
Risk Capacity
Risk Communication
Risk Contingency
Risk Control
Risk Culture
Risk Estimates
Risk Evaluation
Risk Exposure
Risk Impact
Risk Intelligence
Risk Management
Risk Matrix
Risk Measurement
Risk Mitigation
Risk Monitoring
Risk Objectives
Risk Prevention
Risk Probability
Risk Profile
Risk Reduction
Risk Register
Risk Response
Risk Sharing
Risk Taking
Risk Tolerance
Risk Treatment
Risk Trigger
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Special Risks
Strategy Risk
Tactical Risk
Technology Risk
Unknown Risks
Upside Risk
More ...
If you enjoyed this page, please consider bookmarking Simplicable.

Risk Minimization

A definition of risk minimization with examples.

Risk Management

An overview of the risk management process.

Cascading Failure vs Resilience

An overview of cascading failure and resilience.

Business As Usual

An overview of business as usual.

Risk Mitigation

A list of techniques for reducing risk.

Risk Mitigation vs Risk Reduction

The difference between risk mitigation and risk reduction.

Risk Control

A list of common risk controls.

Risk Value

A definition of risk value with example calculation.

Risk Impact

The common types of risk impact.

Risk Communication

A definition of risk communication with examples.

Risk Management Process

Overview of the steps in a risk management process.

Risk Treatment

The four things that can be done about risk.

Risk Acceptance

When risk management resulting in choosing to accept a risk.

Risk Avoidance

A risk management technique that averts, sidesteps or deflects a risk.

Risk Reduction

The four ways to reduce risk.

Risk Sharing

The practice of distributing risks.

Risk Transfer

A risk management technique that transfers risks to a third party.

Risk Contingency

A definition of risk contingency with examples.

Risk Minimization vs Risk Management

The difference between risk minimization and risk management.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map