Risks Are Worth Taking— and Managing

Living is a risky business and risk increases as you get older. It’s just a fact of life, and those of us at the threshold of our golden years realize dangers lurk in places we’ve never considered before.

For instance, at 65 the risks of illness, injury and death are dramatically higher than they were at the ages of 25, 35 and even 45. We may not jump off and over things anymore, because arthritic joints complain when we do such things and you might find yourself limping the rest of the day. Old injuries, which weren’t such a big deal twenty or thirty years ago, come back to haunt us and diminish quality of life.

In the insurance business, risk is what it’s all about. Their product is essentially assuming the financial risk for your potential losses, whether it is property damage, injury or the liability for someone else’s loss that can be blamed on you. Insurance companies get paid to accept this risk, and their money keeps coming in until something bad happens.

To avoid having to make the big payoff, insurers do assessments and identify perils or risks. Then they offer training and initiate programs to eliminate or reduce those risks. In business-speak this is risk management.

Every decision you make is a form of risk management.

You take risks every time you leave the so-called safety of your home. In fact, there are risks to getting out of bed, staying in bed and going to bed in the first place. Philosophers tell us that risk may be scary but it is also good, as in “there is no reward in life without risk.” Entrepreneurs, or at least the rich and successful ones, will tell you that you’ve got to take risks to make the big score. Others regarded as successful in business say the key is to minimize your risks. You investigate, analyze, identify and then come up with a plan to neutralize your risks.

Warren Buffett, who is as successful as anyone around, says “risk comes from not knowing what you are doing.” In other words, you strive to be ready for anything.

So living is a risk, beating the odds. Sometimes it’s out of your control— you get struck by lightning, diagnosed with cancer or find yourself in an unavoidable encounter with a drunk driver on a back road. Other times it’s about playing it smart, taking care of yourself and managing your risks.

Managing risks is also an imperative part of financial and retirement planning.