Everyone and their auntie seem to appreciate the obvious fact that no one should be holding investments that keep them up at night. However, assessing what constitutes risk and how much risk is acceptable is a more complex question for which there are few simple answers.
Let us nevertheless attempt to cover the ground, starting with the biggest misconception of them all, namely that there is such a thing as a risk-free investment. This is nonsense because even the misguided people who stuff money under their beds in the belief that this is the safest place to put their hard-earned cash, risk theft or fire.
Next up, where risk mitigation is concerned, comes the army of snake oil salesmen, usually employed to sell mutual funds and in Hong Kong, augmented by the purveyors of Mandatory Provident Funds. They almost always classify their wares in terms of being 'high', 'medium' or 'low' risk. Not only are these categories often misleading in terms of performance, they are also meaningless because there is no such thing as a risk category which covers everyone - risk is personal.
Thirdly, we are often confronted with the old adage of 'the greater the risk, the greater the reward'. This is not necessarily true because, for example, buying bonds is generally cited as a low-risk option, offering moderate but stable rewards, whereas buying equities is considered higher risk, with the promise of higher rewards.
But the record shows that long-term purchase of equities is always more profitable than long-term purchase of bonds without incurring significantly greater risk. So, what appears to be a greater risk may well turn out to be nothing of the kind.
Still, there are many who decline to invest in shares because they feel markets are inherently unstable and that they don't understand how they work. If that's so, they are probably better off avoiding equity investments. They are also likely to be counted among those whose objective is to find an asset with the least likelihood of loss as opposed to the highest likelihood of gain.
There is no need to make value judgments about either of these attitudes because investment objectives are purely a personal matter, what counts is that the investor should be comfortable with their investments.