Final answer:
Client business risk can change due to economic factors like natural disasters or unemployment, changes in banking regulations, or personal life events affecting the individual's financial circumstances. The perception of risk, particularly in the banking industry, can also trigger financial instability. An individual's stage in life can influence their investment risk tolerance level.
Step-by-step explanation:
Client business risk can arise or change due to a variety of circumstances, often beyond the individual's control. For instance, economic risks stemming from natural disasters, wars, or widespread unemployment can drastically affect a business's ability to operate and meet its objectives. Changes in, for example, banking practices and regulations can affect a company's financial flexibility and reputation; including additional names on bank cards or abrupt changes to wills may alter a business's risk profile. Personal events such as a change in financial state, shifting to a different line of work, or significant life events like starting or ending school, changing residence, and varying social activities can also influence an individual's investment risk level and ultimately impact business stability.
Moreover, the banking industry is particularly sensitive to risk perception. The mere suggestion of a bank failing can trigger a mass withdrawal of deposits, leading to a real financial crisis for the institution. It's noteworthy that as individuals pass through different phases of life, their tolerance for investment risk often changes. People may be more willing to take risks in their early careers when they have more time to recover from potential losses, as opposed to later stages where they may prefer more conservative approaches.