Editing Hargreaves Lansdown plc (section)

== Risks ==
As with any investment, investing in Hargreaves Lansdown carries a level of risk. Overall, based on the Hargreaves Lansdown adjusted beta (i.e. ccc), the degree of risk associated with an investment in Hargreaves Lansdown is 'ccc'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used the 25 available share price Hargreaves Lansdown data points. We note that the amount of available data observations for Hargreaves Lansdown is less than what's typically used in the five years of monthly data beta calculation (i.e. 25 observations vs. 60 observations), and accordingly, calculating the beta of such a company may be considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta.

The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.50 and 1.50. Further information about the beta ratings can be found in the appendix section of this report.

The key risks

Investing in Hargreaves Lansdown involves several key risks:

Market Risk: The value of investments can go down as well as up due to market fluctuations, potentially affecting investor returns.

Regulatory Risk: Changes in financial regulations or compliance requirements could impact the company's operations and profitability.

Operational Risk: Any disruption in the company’s operational processes or IT systems could negatively affect client services and trust.

Competitive Risk: Increasing competition from other financial service providers may affect market share and profitability.

Interest Rate Risk: Fluctuations in interest rates can impact the company's income from interest-bearing assets.

Credit Risk: Clients defaulting on loans or other obligations can result in financial losses for the company.