Why I need to MANAGE the RISKS in my life.

on April 1, 2020

Life is full of difficulties and challenges. Some of the things we deal with include the possibly of injury or loss. These possibilities are sometimes referred to as Risks.

There is a process we can follow to deal with the risks associated with everyday living. Families can and should use Risk Management thought processes to protect themselves.

The Risk Management process basically includes the following:

Identifying the risks you deal with in your life.
Prioritize those risks. Decide which risks are critical or important and which ones are not.
Manage the critical or important issues

Once you have identified the risks that need attention, you can decide how to manage those risks. These are some of the options:

Ignore the risk and HOPE it doesn’t happen. This is the ostrich approach and it is not very effective for potentially large losses. Also, hope is not a good risk management thought process.
Change the way you do things to minimize or eliminate the risk. Let’s consider this example. You have an old trampoline in your back yard which does not have a net around it and your children have all moved away. The children in the neighbor come over and use your trampoline and some have been injured. These could be some of your options.
- You could put a fence around the back yard to control access and just limit the trampoline’s use to future hoped for grandchildren.
- You could put a net around the trampoline to reduce the possibility of injury. This could be used in conjunction with putting a fence around the yard.
- Or, you could get rid of the trampoline and eliminate the problem.
Transfer the risk to someone else. This is a fancy term for buying insurance. When you purchase an insurance policy you effectively transfer the risk from you to the insurance company. You are paying a premium for the insurance company to assume that risk for you. If you have transferred the trampoline risk to an insurance company, they would pay the medical bills for the neighborhood child who breaks their leg when jumping off of your trampoline.