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Is there any good risk assessment matrix for investment purposes?


Let's say an asset management company needs to analyze its holdings. So a risk matrix is needed.

get out your spread sheet and construct one. They are fairly easy to do. Lay out the investments in the rows and the risks in the columns. Then assign values at the intercepts, say 1 to 10 , then sum across the rows. The riskiest assets will have the highest score, the least risky the lowest. But actually you need to balance risk against expected return ROI, so that also needs to be taken into consideration. Add another column with the expected ROI. In general the greater the risk score, the greater should also be the ROI score. If not, the asset is a bad investment.

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