What is a risk score?
It is a number that measures the risk involved with investing in a certain company. It's a measure of volatility that is linked in the UK to the FTSE 100. Risk scores comprise a company's credit history and expected future performance.
Where have you heard about risk scores?
Risk scores can be applied to businesses or individuals and if you've ever applied for credit, then some form of a credit and/or risk score will have been made in the lender's decision about whether or not to lend to you.
What you need to know about risk scores.
Everyone's tolerance to risk is different, so it's important to take this into account when making an investment decision. A risk score is designed to give potential investors a number with which they make an informed decision about whether or not a potential investment is within his or her own levels of acceptable risk.
Risk scores are calculated using up to three years of a business' weekly total returns and the volatility is related to the FTSE 100 as a market standard. Scores are typically updated on a weekly basis.