Even if you did not celebrate Valentine’s Day on February 14, it was hard to miss the many bags of conversation candies, in between the chocolates and bouquets of flowers. According to the website for the New England Confectionery Company (“NECCO”), Sweethearts® have been around since 1902. “Each year, NECCO manufactures about two billion hearts in order to keep up with the passionate demand for this American classic.”

There is a lot to be said about things that never go out of style. Take investment risk awareness for example. Whether the global capital markets are zigzagging, plunging or heading up, a prudent investor will still want to consider how much risk he can tolerate in order to meet his goals. Regrettably, risk is sometimes given short shrift, especially when the bulls are running.

As New York Times journalist Ron Lieber points out, volatility is a good eye opener since no one likes to see their performance reports veering into negative territory. According to “As Stocks Gyrate, It’s Time to Measure Your Risk Tolerance,” reconsidering one’s philosophy about uncertainty may be the best way to ensure a good night’s sleep. Interested parties can avail themselves of risk-focused questionnaires provided by companies such as FinaMetrica or Riskalyze.

I concur that “too many people don’t know their tolerance well enough and take on too much risk.” As I’ve long maintained, not every anticipated dollar or basis point return is equal in terms of risk. When an investor assumes “too much” risk, there is a chance that expected higher returns will not materialize and losses may occur. My sense is that he is sorry not to have done more “what if” homework at the outset.

Concerns about anticipated payouts, and the related desire to become more risk savvy, apply to all sorts of securities and funds and not just stocks. I have a friend who is on an emotional roller coaster right now as he awaits news about the restructuring of an insured fixed income security. He purchased it two years ago as a safe haven, never thinking that the wrapper would be in name only.

Risk is a veritable four letter word for a reason. Unless you are lucky, ignoring risk could turn out to be an expensive mistake. Taking risks is a fact of life. The objective is to make informed decisions that incorporate risk. Scoring your ability to withstand adverse outcomes is a good first start but don’t forget that qualitative unknowns need to be investigated as well. As I’ve shared with blog readers of Good Risk Governance Pays and Pension Risk Matters, numbers alone seldom tell the entire story.