Risk Management is a broad area of expertise. In the context of Financial Planning, is a critical component in that it addresses the potential obstacles that could impede an individual or a business from achieving its goals.
How does Risk Management work?
During the initial stage of the Financial Planning process, we take time to understand the client's concerns, as well as, create awareness to the potential obstacles.
Things such as you and your loved ones Health, the Economy, Taxes, Volatility, Spending, Dependents, Nature, and of course, the unknown, all play a factor in a Financial Plan, particularly in Risk Management.
Once we Identify the potential Risks, we discuss strategies to address them, which are:
- Avoidance - "I will stay home to avoid getting sick."
- Assume and Manage the Risk myself- "I will save up enough money to cover my personal and business expenses in the event of a serious illness or injury that will prevent me from working."
- Reduce - "I will get Catastrophic Health Insurance with a very high deductible, in the event of a serious health issue. I will cover smaller health issues out-of-pocket."
- Transfer - "I will transfer the risk of not being able to cover my personal and business expenses to an insurance company."