Steps To Anticipate Risks
Risk is anything that can happen to people which do not want to happen. Every human being has the risk of whatever he's doing. In addition, human life itself also contains a lot of risk. There are some risks that can be avoided, and there are some risks that can not be avoided. Examples of these risks can be avoided is the risk of accidents or the risk of theft. While examples of risks that can not be avoided is the risk of death. The effects of risk often leads to substantial losses. Whether the loss of the psychological side, as well as losses from the financial side. If your home got fire, then you will have financial losses experience in the value of your home when the fire occurred. Therefore, it is important for you to anticipate any risks that might happen to you.
Not only insurance
Hearing the word anticipation of risk, your mind may be directly carried over to the term "insurance". In the science of financial planning, the purpose of insurance is to protect you from financial losses that may arise from the occurrence of a risk. For example, you probably can not avoid the risk of injury to yourself, but you can protect yourself from financial losses that may arise from the occurrence of the accident.
Are all risks that can happen to you need to be insured? The answer is not. For example, you often wear shoes that have the possibility for lost stolen. Will you insure your shoes? Most likely not. Why? This is because if you lose your shoes, you may not loss amount to much. Another case when your house caught fire, then the financial losses that may arise can be tremendous. That's why, you need to take fire insurance for your home.
Options to anticipate those risks, referred to Risk Management. For simplicity, I shall call this in anticipation of risk. In this article, I will show you how you can anticipate the risks that could happen to you.
MULTIPLE CHOICE
Financial losses can occur when you experience death, accident, illness, or if your property is lost or damaged. Sometimes, the financial loss can also occur when you run into lawsuits from third parties, such as when you hit someone else to hurt and you are required to replace all the medical bills.
Now, what options are available for you to anticipate the risks? Assuming you are required by your boss (or anyone) to bring a package by using the vehicle, from city A to city B. However, the busy street keep you threatened with the risk of accidents. Therefore, there are a number of options for you to anticipate these risks:
- Avoiding risk. You can avoid the risk of accident. The trick, do not drive. But consequently, your package will not be sent.
- Facing Risk. You can drive and take the package as normal without the need to be careful, and you accept the consequences if the risk of an accident does occur.
- Reducing Risk. You drive and bring the package, but be careful in driving. Thus, the risk of accidents can be reduced.
- Dividing risk. Packages should you take divided in two with your friends. He was carrying several packages in different vehicles, so do you.
- Transfer of Risk. You ask your friends who brought the whole package.
Well, now we try to practice the theory of risk aversion. We suppose you want to buy a house, but like the other houses in general, you would buy a house that has a risk of fire. To anticipate, then the options available to you are:
1. Renting it, do not buy (avoiding risk).
2. Buying a home, and face only the risk, where hoping that risk of fire will not have to happen (at risk).
3. Provide a fire extinguisher in your home (reducing risk).
4. Give up some losses on the other hand, if your house caught fire (for risk).
5. Submit all of the losses on the other hand, if your house caught fire (risk transfer).
The fourth and fifth choice above is what we called with insurance. That is, the insurance can be a party you claim loss if you run a risk.
1. Renting it, do not buy (avoiding risk).
2. Buying a home, and face only the risk, where hoping that risk of fire will not have to happen (at risk).
3. Provide a fire extinguisher in your home (reducing risk).
4. Give up some losses on the other hand, if your house caught fire (for risk).
5. Submit all of the losses on the other hand, if your house caught fire (risk transfer).
The fourth and fifth choice above is what we called with insurance. That is, the insurance can be a party you claim loss if you run a risk.
TAKING DECISIONS
Once you know what choices are available for you to anticipate risk, then your next step is to write the risks of what might happen to you, and what options you will use to anticipate them. Below are the steps:
1. Know your risk
2. Evaluation of the consequences if the risk occurs.
3. Take a decision on what option would you use to anticipate these risks
For example, risks that may happen to you is death, accident, illness, accident of the vehicle, the car accident, layoffs, and can not work. Therefore, the steps are:
1. Know your risk: Death.
2. Result evaluation: The cost of family life that you leave behind will not be repaid.
3. Take the decision:
a. Risk Avoidance: In this case it is impossible to avoid the risk of death.
b. Facing Risk: It might, with the consequence that the cost of family life will not be paid
c. Reducing the Risk: The risk of death can not be reduced
d. For risk: Submit some of the financing of your family live on the other hand, if you die
e. Transfer of risk: Submit the entire financing of your family live on the other hand when you die.
It's up to you, the decision which would be taken.
Once you make a decision for a risk, then repeat these steps for the next risk (such as accidents). And so on. So now you already have a program for your family's risk aversion.
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