Website seeks to help manage risk

Investors can use the web to measure risk

Risk management experts, RiskMetrics, have launched a new investment tool on the internet to help private investors measure risk.

Its founders say it will enable investors to be more savvy about making investment decisions when building up their portfolios.

"What we see is millions of investors who have no clue to what risk they are taking in their portfolio," Martin Spencer, director of RiskMetric's retail products in Europe, told BBC Online.

Investors will be able to access the service, called RiskGrades, on its own internet site, or through FTyourmoney.com or sharepeople.com.

On the site, investors can make up their register their own portfolios or can create virtual portfolios to find out how risky it would be to invest in one particular stocks in or a basket of stocks. They can, for example, calculate how much money they would get if they converted a stock holding into cash.

Investment gradings

Each single investment is given an investment grading, ranging from zero to 1,000. The grading changes daily.

For example, an ordinary deposit account gets a zero grading for zero risk while the benchmark London Stock Exchange index gets 100 points and technology stocks get anywhere between 600 and 1,000.

The service will also offer investors an online educational course, which will help investors decide what kind of risks they should be taking and what kind of portfolio would suit them.

Mr Spencer said he hoped the tool would become an essential part of investing for private investors, especially at a time when more and more people are making critical investment decisions and the market is becoming more and more volatile.

"For a private investor it's like trying to cross the road with a blindfold on," he said.

"Especially as the traffic is getting worse," Mr Spencer said.

RiskMetrics was formerly investment bank JP Morgan's Risk Management Products Group and provides the financial community with risk management tools.