Personal risk management process
Identification of risks
The process is exactly the same as any other application of risk management. After defining objectives, the next step is to identify risks, including both threats which could hinder us as well as opportunities which could help us.
After risk identification the next step is assessment that is estimating the probability and impact of each identified risk to prioritize them for further action. Simple “high/medium/ low scales can be used for this, enabling the worst threats and best opportunities to be found.
Assessment is to be followed by response development, finding appropriate and effective actions to minimize threats and maximize opportunities. Some of these might be simple (talk to boss or colleagues about possible internal openings: research available training courses), and others may require more effort and investment (obtain coaching to explore my deep-seated personal goals: join professional association to improve networking.
Implementation and monitoring
Finally, identified responses need to be implemented, and their effect should be monitored, to see whether they are moving us towards our objective. Where necessary, we should develop new responses, remaining alert to the possibility of secondary risks. And our risk assessment should be updated regularly to find and respond to new threats and opportunities.
A personal risk management strategy should ensure that assets are protected and debts are cleared in the event of the unforeseen death, major accident or major illness of a key financial member(s) of a family or partnership. This entails personal protection insurance. In much the same way as one would insure a home or car, one should insure for the protection of income, accumulated wealth and lifestyle.