Assessing and Explaining Risk: Investors' Expectations After the Financial Crisis

This EIU report examines how European investors assess their own risk level, what constitutes low and high risk, and the extent to which investors appreciate the connection between risk and return.

 

Key findings include:

  • Only a minority of investors think the recent financial crisis was as bad as it can get.
  • Investors now realise there is no such thing as a ‘safe haven’.
  • British private investors believe they were less affected by the crisis than their continental counterparts.
  • Continental advisers believe the crisis affected their clients more than the clients themselves believe.
  • British private investors are more open to taking risk to achieve their investment goals than mainland European investors.
  • Corporate and individual investors are fairly united in their perceptions of risk, but the views of financial advisers differ significantly.
  • Corporate investors have further diversified their asset mix in response to the crisis.
  • Investment risk needs to be redefined and investors’ expectations need to be realigned with market conditions.
  • Investors are heavily influenced by the media.

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