Risk profiling refer to the threats to which an organization is exposed. A risk profile is important for determining a proper investment asset allocation for a portfolio. Organizations use a risk profile as a way to mitigate potential risks and threats as the trade-off between risk and return.  A risk profile also illustrates the risks and threats faced by an organization. It is in a corporation's best interest to be proactive when it comes to its risk management systems. Some risks can be minimized if they are properly accounted for.

 

Many companies hire independent auditors to help discover any risks so that they can be properly addressed before they become external issues.