Risks are part of our daily lives. From crossing a busy street corner to deciding which stock to invest your life savings in, all our actions involve risks. However, not all risks are created equal, and some risks can literally cost you an arm and a leg. Whether you consider yourself a risk taker or a very cautious individual, it always pays to know what you are getting yourself into. The better you know about a situation, the better you are at arriving at correct decisions involving risks.
A risk calculator can be an invaluable tool for people who want to arrange the mess of quantifiable variables in any given situation into something more concrete and tangible. This is done usually by determining relative risk, also known as risk ratio, or the probability of an event or risk from occurring. Because the kind of risk involved varies depending on the subject matter, risk calculators come in all shapes and sizes. It is important therefore that you know what kind of risk calculator suits your needs.
Here are some areas where risk calculators are considered as essential.
- Stock Market. Risk calculation provides crucial information on decisions to buy, hold or sell stock that can potentially fill your pockets with cash or burn a hole right through them. One of the ways to do this is to apply the beta ratio, which tells you the stability of a stock's price relative to the fluctuations of the stock market. A stock's beta ratio, as well as other pertinent information can be provided by some online service providers such as Reuters. Generally speaking, the more you risk, the greater the potential return. This is known as the risk-return tradeoff, which can be ascertained using one of the many calculators found at Fido. Other risk formula calculators can be downloaded from Wareseeker.
- Foreign Exchange. Just like in stock markets, risk calculators can also provide you with vital information regarding foreign exchange dealings. The use of Fibonacci Retracements in risk calculators is prevalent and many sites offer the service for free such as EarnForex and FXstreet.
- Banks and Corporations. Although banks are often considered to be the hallmarks of good financial sense, banks too go bankrupt and more so with corporations. Risk measures are often utilized to know whether or not a business or financial institution is sufficiently liquid to maintain operational viability. A popular risk measure called value at risk measures the risk of loss of financial assets. Value at risk calculators can be found at the websites of Culverhouse College of Commerce and Fincad. Additional risk calculators that can determine other risk measures are downloadable from Download3000.
- Health. Health is wealth. While hearing this overused cliché will probably give you the urge to bludgeon me to death, it doesn't detract from the fact that all the money in the world cannot always save you from some horrible disease or accident. There are websites that offer a whole range of health calculators to see how fit you are. Some of these calculators can be found on the websites of HealthStatus and BestHealth.
Always remember, risk calculators are merely tools that help you understand the risks involved and over reliance on them can be as bad as not using them. Though risk calculators can provide you with very useful information such as risk ratios, not everything is quantifiable and you should always leave space for the unknown. In the end, the human element in all things that we do will always be the deciding and ultimate variable.