Risk Management and Insurance
Every one of us faces a host of risks every day. Driving a car, eating in a restaurant, crossing a busy street, owning property, and sometimes just breathing constitute acts of faith that can carry significant risk. When adverse events might cause losses that can be quantified in dollars, we can anticipate them and manage them to mitigate the consequences. A clumsy visitor trips on the rug in your front hall, falls, and considers retiring on the proceeds of this misadventure. Or, you fall down stairs and are unable to work for a year. Avoid sleepless nights and evade these and other potential pitfalls by managing your risks.
Managing risk can be done in several ways. Once you’ve identified a risk, you can elect to:
Prevent it -- by, for example, practicing good fire safety
Avoid it -- by, for example, hiring a professional to trim your tree
Spread it -- by, for example, backing up your computer files and keeping the copy at a separate location
Retain it -- by assuming that certain losses are just unavoidable costs to be absorbed
Transfer it -- by sharing the risk with an insurance company
In most cases, risks that you can’t readily handle or predict are best transferred to a reliable insurance carrier rather than retained by you. You’re no doubt already familiar with the typical personal and/or commercial lines of insurance such as homeowner, auto, life, disability, health and business owner’s coverage. These lines can protect you from varying degrees of risk depending on the likelihood or probability of an adverse occurrence.
