There are so many varieties of risk in this world, oh Bermuda. Take your pick: plane trips, automobile excursions, bathtubs, boats, politics, hurricanes, electrical malfunctions, fear of losing a job, being embarrassed, relationships, public speaking, and so on.

Trying to make it through the funnel at Crow Lane in one piece is a risk every day to those who don't want to end up in a metal sandwich. Revealing your true feelings even to a cherished friend is a risk some just will never allow themselves.

Crossing borders can be a very risky business, as many have discovered through lack of appropriate documentation, rights to residence, expired passports, and the wrong kind of associates.

Working with relatives can be a collateral risk. You hire your brother-in-law to subcontract with you on a renovation project. Sometimes, he shows up, sometimes not.

Adding insult to injury you've given him an advance for equipment. In the way of human nature, i.e. for every really responsible person there seems to be another individual just as irresponsible, he completely abdicates his job. You think that relationship will ever be the same?

He has placed your business investment at risk, demolished your trust, while not all of the rest of the relatives agree with you.

Investment risk is in a different category altogether. There are so many moving parts to investment risk, so many types of securities, currencies, markets, capital, shareholders, debt, custody, layering, advisory, credit, stability, business, managerial, electronic, behavioural risk, emotional risk, and many more.

Yet, without fail, whenever investments are mentioned in the context of planning, advising, and determining investment choices, the emphasis is focused on risk. This is as it should be. Investing is not an exact science. Nothing is guaranteed, but is anything truly guaranteed in life?

The much difficult piece of the equation is to understand what investment risk means to each individual investor.

Over the years, hundreds of articles, qualifying theses, speeches and studies have been recorded on investment risk. I've often received feedback from beginning (and even savvier) small investors that they don't really understand the whole risk tolerance interview process.

A paper written in 2002 by Common Sense InvestSense™…Portfolio Optimisation, stated that, in their opinion, "Asking an investor how they would feel if their portfolio lost half its value seems rather foolish.

"Other questions, while reasonable, offer little real insight and increase the potential for misinterpretation. Asking an investor how many years of investment experience they have does not properly differentiate between the widow who has 20 years of investment experience with certificates of deposit and treasuries and the former executive who has 20 years of investment experience with stocks and various other investment products."

The following statement triggers additional comments: "Every investor needs to determine what kinds of investment strategies are appropriate given their risk tolerance level."

An all too common client refrain is "I've taken those risk profile tests, said one individual, and I still don't know what I'm supposed to be doing, or what I ended up with for investments. I hope my investments will be okay. "

Do we honestly think okay is okay?

The risk tolerance mantra is repeated endlessly in the investment world, with almost parrot-like insistency. Somehow, the finance world seems to have produced a disconnect with the clients we serve.

Studies have also shown that while financial representatives when responding to client satisfaction surveys, overwhelming, think they do a very good job, in reality; clients' attitudes to the same surveys are quite a ways down the ladder.

One reason stated by the Five Factor Model for Measuring Risk Tolerance paper by Hunter M. Holzhauer, Robert W. McLeod, The University of Alabama, Working Paper, September 1, 2009 is that representatives may not adequately understand their clients' attitudes toward risk.

These statistics are reminders that particularly during volatile market activity, these are the precise times when clients need the most reassurance that the choices they've made aren't all heading south. If you as the client didn't understand the real investment risk in a stable environment, your level of comfort certainly won't increase when capital markets exhibit instability.

What can be done to help the investor better understand what he/she is invested in, where it is situated, how it will benefit him/her, and why one investment over another is the right choice for his/her individual situation?

Many finance professionals, including me, would like to see a complete revamp of the risk tolerance interview process, for starters. Much easier said than done, but here are some suggestions from the experts and clients themselves when working with a representative on investment choices.

I'd like to hear if you agree or disagree with me and how you feel when thinking about your investment, including your pension investments.

1. Use of less investment jargon; only financial representatives are truly comfortable with terms such as benchmarks, indexing, prospectus, long-shorts, margins, bond yields, TED, options and so on.

2. Define your risk within a format that relates to everyday living, i.e. if the you, as the client, has goals that are financially large and very short term, you may not be able to absorb any more risk.

3. Thinking of risk in personal client dollars and amount terms, rather than percentages of rates of return.

4. Understand attitudes about losing within your client personality profile. What you say as a client and how you feel are very different. Aggressive investors in good times may be the first to panic in uncertain times.

5. As the client, explain in your own words what risk really means to you.

6. Be collaborative with your representative about the investing process. Each person involved in an investment process needs to take a piece of the responsibility, i.e. don't expect the representative to do all the talking, decision making, and investment choices; they are there to assist your investment decisions.

7. Above all, learn about your investments. Do not rely on anyone else to educate you about your financial security.

You, as the client, may have additional input. Please feel free to send it to me.

Sources: Five Factor Model for Measuring Financial Risk Tolerance, Hunter M. Holzhauer, Robert W. McLeod, The University of Alabama, Working Paper, September 1, 2009 www.investsense.com Common Sense InvestSense™…Portfolio Optimization, 2002.

Martha Harris Myron, Hamilton, Bermuda is an international Certified Financial Planner™ practitioner in private wealth management. She specialises in independent fee-only cross border investment, tax, estate, and strategic retirement planning services for Bermuda residents with cross-border and multi-national connections, internationally mobile people and US citizens living abroad. For more information, contact martha.myron@gmail.com">martha.myron@gmail.com or Patterson Partners Ltd 296 3528.