Chapter 6 Personal Risk Management What Is Risk

Chapter 6 Personal Risk Management

What Is Risk? • Risk is the chance of injury, damage, or economic loss. • Probability is the likelihood of a risk. • A loss refers to physical injury, damage to property, or disappearance of assets. 6 -1 Risk Assessment and Strategies Slide 2

What Are the Types of Consumer Risk? • Personal risk means you could lose something of personal value. o Example: breaking a leg missing fun activity • Some risks result in a financial loss. o Example: driving without insurance paying a lot of money to repair car • Some risks jeopardize financial resources. o Example: getting sued for causing an injury to another having your wages garnished to pay for judgment against you 6 -1 Risk Assessment and Strategies Slide 3

How Can You Manage Risk Using Risk Strategies? • Risk assessment involves identifying risks and deciding how serious they are. • Use risk strategies to protect yourself against loss. o Reduce risk (change your actions) o Avoid risk (stop a certain behavior) o Transfer risk (buy insurance) o Assume risk (self-insure) 6 -1 Risk Assessment and Strategies Slide 4

Risk Assessment Risk Probability of Occurrence Seriousness Possible Rating* Consequences Losing my job Medium 10 Getting in a car accident Unknown 10 Suffering physical injury from snowboarding Medium 3 Missed work time Medical bills Having bike stolen Low 2 New/used bike purchase Missed payments Lower credit rating Personal injury Lawsuit * 1 is low risk; 5 is medium risk; 10 is high risk 6 -1 Risk Assessment and Strategies Slide 5

Building Communications Skills Reading Speed • Select reading material carefully for value. • • Preview the material. Do not skim or skip passages. Read in the correct order. Adjust reading speed to suit the material. Read groups of words at a time. Use a pacer to focus your eyes on the page. Read in a quiet place. 6 -1 Risk Assessment and Strategies Slide 6