The ability (capacity) to bear risk is primarily assessed through objective factors such as the investor's time horizon, expected income, and wealth relative to liabilities. For instance, an investor with a 20-year horizon has a greater capacity to bear risk compared to one with a 2-year horizon, as there is more time to recover from potential losses or adjust to changing circumstances.

In contrast, willingness to take risk reflects the investor's psychological comfort with risk and is often gauged through discussions or psychometric questionnaires. This distinction is crucial in analyzing an investor's overall risk tolerance.