2.4 Attitudes to risk and financial choices

Question 1

Physical risks

Answer 1

hazardous sports and activities such as parascending or bungee jumping. They also include more subtle risks, such as drinking alcohol, sunbathing or smoking.

younger people are often more willing to take physical risks than older people.

Question 2

Emotional risks

Answer 2

include trusting other people, such as friends, partners and spouses, and so risking being hurt by that person.

Question 3

Attitudes to risk

Answer 3

Attitudes to risk vary from person to person and can change over the stages of the life cycle.
Some people avoid taking risks in all aspects of their life.
risk averse.

Question 4

Risk to reputation

Answer 4

example is borrowing money and not repaying it on time: the borrower’s behaviour affects the way they are regarded by other people.

impact on the amount of money they can borrow in the future and at what cost.

Question 5

Financial risk

Answer 5

An example of a financial risk would be putting money in an investment that might fall in value, or gambling.

Question 6

Consequences to risks at different ages

Answer 6

Someone who loses money young has many potential years to rebuild their savings
Middle age - only a few working years left