More About Risk

Risk is the normal condition. Risk is everywhere. Risk arises when anything changes.

You may have noticed that change is common and accelerating. Risk is too.

Risk and why it’s there.

There are ways to look at risk. The classic is the amount of the loss and the probability of an adverse event happening. others involve other dimensions. Time is one. the stock market might be down when you need the money.

Many risks exist because the person has not considered all the circumstances:

  1. If you want to test your car at high speeds be sure you know the speed rating for the tires. Especially true for motorcycle drivers.
  2. Understand the stock market. It is an auction market and some days everyone wants what is for sale and other days not so many care. Prices changes with the bidders actions. You have no idea why other people act the way they do, so you cannot know future prices.
  3. Understand how medications work. Not everyone can take any given medicine.
  4. Understand how your body works. As you age things change. You should adapt. Bench presses at 75 might not do as much good as a quiet walk.
  5. Have a hint about how the economy works. That will affect your potential income, your tax rates, interest rates, and the direction of change.
  6. Understand people. They are not as unpredictable as you think.
  7. Notice changes. Technology tends to change towards what people want more of. Longer battery life, lower prices, more features.

Risks are affordable or they are not 

If they are affordable, the approach is to minimize the potential loss by care and accept what happens. Everyone leaves an umbrella in a restaurant sooner or later. Driving a car while impaired, or with bad brakes, is avoidable. Being out of shape has risks.

Don’t buy excuses, invest in a solution.

If they are unaffordable, you minimize the likelihood of an event and insure the loss. Your house might burn down, but it is even less likely if you don’t store gasoline in the basement. Insure losses you cannot afford. House insurance with a larger deductible reduces premium. Be sure to insure to value. You might not do very well if you have a partial loss and have underinsured. Check with a professional.

The best insurance situation is high cost / low probability. Low cost high probability events, when insured, have high premiums because of the insurer’s overhead.

If the risk is unaffordable you must eliminate the risk or pay someone else to absorb any losses.

New risks are arising 

That’s normal. Change happens, people adapt, and new procedures and opportunities come along. Adaptation is on you.

What’s the reward?

Risk is not always a bad thing. Some risk is about changes that need you to change. Some of them will be positive. Even very positive. There was a time when changing from dial – analog phones to push button – digital phones was an unwelcome change for some.  Colour TV. Talking movies. Smart phones. Netflix.

When you see the idea of risk that improves things, you will take more interest in paying attention to it.

The takeaway

If you notice risk and change you will become a more dynamic person.

If you notice and act, you will have a more predictable future.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email

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