risk-tolerance

Vocabulary Word

Definition

'Risk-tolerance' refers to the degree of risk that an individual or organization can comfortably endure before feeling the need to change their behavior. It's about how much risk you're willing to take without getting anxious.

Examples in Different Contexts

In personal finance, 'risk tolerance' is the degree to which an individual is comfortable with the risk of losing money on investments. A financial advisor might explain, 'Assessing your risk tolerance is key to creating an investment strategy that suits your financial goals and comfort level.'

Practice Scenarios

Creative

Scenario:

This modern design concept isn't traditional, but it's groundbreaking and could set us apart.

Response:

Given our risk tolerance, I think we should go for it. However, we should also have a safer design as a backup.

Tech

Scenario:

The new security protocol offers advanced functionality, but it could allow potential vulnerabilities.

Response:

If it's a significant security risk, according to our company's risk tolerance, we should not implement the protocol until it's more secure.