Estimate the potential risk score associated with an investment based on key factors.
Your Estimated IBIS Risk Score:
Understanding the IBIS Risk Calculator
The IBIS Risk Calculator is designed to provide a preliminary assessment of investment risk by evaluating several critical factors. IBIS (Investment & Business Insight Score) is a hypothetical risk metric that synthesizes various influences on an investment's potential volatility and downside. This calculator helps investors and business analysts quickly gauge potential risks before delving into more complex due diligence.
Key Factors Considered:
Market Volatility: Measures the general fluctuations and unpredictability of the broader market or asset class. Higher volatility generally implies higher risk.
Regulatory Uncertainty: Assesses the potential impact of changing government policies, laws, or industry regulations. Unstable regulatory environments increase risk.
Geopolitical Risk: Considers the influence of international relations, political instability, trade wars, and global events on the investment.
Sector-Specific Risk: Evaluates risks inherent to the specific industry or sector the investment operates in, such as technological disruption, changing consumer preferences, or supply chain issues.
Company Financial Health: Reflects the underlying financial stability and performance of the specific company or asset. Stronger financial health typically mitigates risk. This factor is weighted inversely to risk, meaning better health reduces the overall score.
How the IBIS Risk Score is Calculated:
The IBIS Risk Score is calculated using a weighted average formula. Each factor is rated on a scale of 1 to 10, where 1 indicates low risk (or high health for financial health) and 10 indicates high risk (or low health for financial health). The formula aims to aggregate these inputs into a single, interpretable score.
Where:
MV = Market Volatility
RU = Regulatory Uncertainty
GR = Geopolitical Risk
SSR = Sector-Specific Risk
CFH_Inv = Inverse of Company Financial Health (11 - Company Financial Health)
The individual weighted scores are summed and then divided by the sum of weights (0.25+0.20+0.20+0.20+0.15 = 1.00) to get a normalized score.
The "Company Financial Health" is inverted (11 - score) because strong financial health *reduces* risk.
The resulting IBIS Risk Score ranges from approximately 1 (very low risk) to 10 (very high risk). This score serves as a quick indicator, but further in-depth analysis is always recommended for significant investment decisions.
Example Calculation:
Let's consider an investment scenario:
Market Volatility: 7
Regulatory Uncertainty: 5
Geopolitical Risk: 3
Sector-Specific Risk: 6
Company Financial Health: 8
First, we invert the Company Financial Health: 11 - 8 = 3.
In this example, the estimated IBIS Risk Score is 4.00, indicating a moderate level of risk for this investment.
Use Cases:
Initial Investment Screening: Quickly filter potential investments based on their risk profile.
Portfolio Diversification Analysis: Understand the aggregate risk exposure across different assets.
Risk Management: Identify high-risk areas that may require more attention or mitigation strategies.
Educational Tool: Help new investors understand the various factors contributing to investment risk.
Disclaimer: This calculator provides a simplified risk assessment for informational purposes only. It is not a substitute for professional financial advice. Always consult with a qualified financial advisor before making investment decisions.
function calculateIbisRisk() {
var marketVolatility = parseFloat(document.getElementById("marketVolatility").value);
var regulatoryUncertainty = parseFloat(document.getElementById("regulatoryUncertainty").value);
var geopoliticalRisk = parseFloat(document.getElementById("geopoliticalRisk").value);
var sectorSpecificRisk = parseFloat(document.getElementById("sectorSpecificRisk").value);
var companyFinancialHealth = parseFloat(document.getElementById("companyFinancialHealth").value);
var resultDiv = document.getElementById("result");
var riskScoreSpan = document.getElementById("riskScore");
if (isNaN(marketVolatility) || isNaN(regulatoryUncertainty) || isNaN(geopoliticalRisk) || isNaN(sectorSpecificRisk) || isNaN(companyFinancialHealth)) {
alert("Please enter valid numbers for all fields.");
resultDiv.style.display = 'none';
return;
}
// Validate input ranges
if (marketVolatility 10 ||
regulatoryUncertainty 10 ||
geopoliticalRisk 10 ||
sectorSpecificRisk 10 ||
companyFinancialHealth 10) {
alert("Please ensure all values are between 1 and 10.");
resultDiv.style.display = 'none';
return;
}
// Invert Company Financial Health score (higher health = lower risk contribution)
// Scale 1-10 becomes 10-1 for risk contribution
var invertedFinancialHealth = 11 – companyFinancialHealth;
// Weighted calculation
var weightedMV = marketVolatility * 0.25;
var weightedRU = regulatoryUncertainty * 0.20;
var weightedGR = geopoliticalRisk * 0.20;
var weightedSSR = sectorSpecificRisk * 0.20;
var weightedCFH = invertedFinancialHealth * 0.15;
var totalRiskScore = weightedMV + weightedRU + weightedGR + weightedSSR + weightedCFH;
// The sum of weights is 1.00 (0.25 + 0.20 + 0.20 + 0.20 + 0.15).
// So, the totalRiskScore is already normalized to a scale roughly between 1 and 10.
// We can add a small adjustment to ensure it stays within a reasonable range, though mathematically it should.
// For clarity and to ensure it visually aligns with a 1-10 scale if inputs were at extremes.
var finalRiskScore = totalRiskScore;
riskScoreSpan.textContent = finalRiskScore.toFixed(2); // Display with 2 decimal places
resultDiv.style.display = 'block';
}