Investing glossary
PRIIPs risk scale
The PRIIPs scale (Summary Risk Indicator) rates the risk of an investment product from 1 (lowest) to 7 (highest), required by EU regulation in each product's KID.
It combines, in a simplified way, the historical or expected volatility of the market it invests in and, for debt products, the issuer's credit risk.
It is useful for comparing very different products at a glance (a bond fund versus an emerging-market equity ETF, for example), but it does not measure the exact probability of losing money, nor does it replace actually understanding what the product holds.