Risk Management
what is risk management?
People have always sought ways to deal with the uncertainties of life, including the ones that may impact their financial objectives. Organizations of all sizes have recognized the importance of sound risk management - the identification, measurement, and treatment of exposures to potential accidental losses. We feel the same process should be used by individuals and families to help control financial risks, and thus increase their economic security. Fortunately, family exposures are typically much less complex and less extensive than in the business world.
In a sense, risk management is not an option; if we simply ignore potential exposures, we will have selected a risk management approach by default - one that only by chance will be the best approach. Clients managing these exposures properly should be able to achieve more acceptable results at a minimal cost.
More often than not, clients are likely to use insurance for at least a portion of their risk management plan.
insurance: a risk (management) financing tool
Insurance is a major transfer tool of risk management. Potential losses can be financed by transferring them to someone else, such as an insurer or insurance company. Common insurance policies used as tools to protect economic security include:
∘
life insurance
∘ health insurance
∘ long-term care insurance
∘ disability income
insurance
Risk management can protect a family against catastrophic losses, or enable a family to continue a lifestyle that might otherwise be severely threatened or disrupted.
True individual freedom cannot
exist without economic security and independence.
- Franklin Delano Roosevelt