Risk Capacity Outputs

Risk Capacity is expressed verbally as either Low, Neutral, or High, depending on its calculated value.

Risk Capacity Value	Risk Capacity Label	Description
< 1	Low	​If Risk Capacity is less than 1, it means that an investor’s Overall Wealth is less than their Investible Assets. This can only happen if they have current liabilities and/or expected future net outflows. As such, they may not be able to afford to take the level of risk indicated by their Risk Tolerance, and should reduce it.
~ 1	Neutral	A calculated value of close to 1 means that an investor’s Overall Wealth is roughly equal to their Investible Assets.  In other words, they have neither excess Risk Capacity to afford an increase in risk beyond their Risk Tolerance, nor do they need to reduce risk below it.
> 1	High	If Risk Capacity is greater than 1, it means that an investor’s Overall Wealth is more than their Investible Assets. This means they have positive net non-investible assets and/or net future inflows. As such, they can afford to increase the risk of their Investible Assets beyond that indicated by their Risk Tolerance, if they are emotionally able to stomach it.