Investment Risk Perception

Investment suitability is strongly influenced by how portfolio information is presented. Variations in content and format can shape investors’ risk perception and tolerance, potentially leading to skewed assessments and suboptimal investment choices. Discrepancies in presenting returns (net vs. cumulative, percentages vs. monetary), risk ranking, performance order, and format (tables vs. graphs) can alter investor judgement, impacting their understanding of risk and potential gains. A transparent, consistent presentation framework that minimises cognitive biases and supports informed decision-making is essential to align investments with investors’ true risk preferences and financial goals.