Personal Risk Management is looking around your home and your life, recognizing risk, and planning what to do about it. Corporations recognize that in business, just about the only sure thing is that you will have risk. According to a global study of financial institutions by Deloitte between the years 2002 and 2004, there was a twenty-five percent increase of board-level oversight in corporate risk management.
In the corporate world, risk management referrers to a company’s evaluation of its exposure to risk identification. A company may be able to identify risk easily, because it comes in the form of a decision. At other times, a company may faces risks and not even be aware of them. The majority of corporations have developed risk management programs and invest time and money into implementing changes and insuring exposures.
Personal Risk Management is exactly the same thing. I actually, consider insurance and personal risk management part of our family financial planning. When I was an active insurance agent a common question my clients would ask was, “How much Insurance should I have?”
A good insurance agent will answer that question with something like, “You need enough insurance to protect your assets, and you have to decide how much and what kind of risk are you willing to assume?”
Your personal risk management strategy may have a major impact on your family’s financial bottom line. Cutting losses at the right time can save your family thousands of dollars. If you are an active and involved family, or expose yourself to a risky opportunity such as leading a youth or sports group you may want to consider this in they amount and type of personal liability insurance you carry.
If your financial goals include planning for your future and investments of any kind, then risk management should be a key part of your overall strategy. As you build an investment portfolio insurance and risk management should be a major consideration. For example, investing in rental property can be a very stable, relatively low risk investment. Deciding how much insurance and what type of coverage you need includes the consideration of all of your investments. Good well-written Landlord insurance coverage may offset the costs, or liability, of the rental house “stories” most landlords gather along the way.
When you have identified a risk your family faces, you need to decide how you will deal with the worst-case scenario. When deciding what and how much to insure it’s up to you to identify the personal risks you are exposed and how much you can or are willing to pay if the worst thing happened. This series of Blogs will be a step-by-step guide to reviewing personal risk management.
Related Blogs:
- Personal Risk Management
- Risk Management: Protecting Your Assets.
- What is “Risk?”
- Retained or Accepted Risks
- Controlling and Reducing Risks
- Eliminating Risks
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