Risk Management

Every decision you make comes with an associated trade-off or consequence. As a result, there is an element of risk management in every conversation we have with our clients. Managing risk entails the process of identifying, analyzing, evaluating, treating and monitoring or reviewing any potential threat. It is a defensive strategy to prepare for the unexpected.

Financial risk management strategies


Methods for managing risk include avoidance, retention, sharing, transferring, and loss prevention and reduction. We help our clients apply these techniques to all facets of their lives. Here are some examples of each of the techniques:

● Avoidance
Avoidance is a method for mitigating risk by not participating in activities that may cause injury, sickness, or death. Choosing not to smoke cigarettes is an example of risk avoidance as avoiding it may lessen both health and financial risks associated with smoking.



● Retention
Retention is an individual or organization’s decision to take responsibility for a particular risk it faces as opposed to transferring the liability to an insurance company by, for instance, purchasing insurance. An individual deciding not to insure for a particular peril at all is an example of risk retention. For instance, deciding not to purchase disability insurance is a form of risk retention.

● Sharing
Sharing risk involves partnering with others to share responsibility for risk activities. Deductibles and premiums are examples of a person accepting some responsibility while transferring a larger portion of the risk to an insurer.

● Transferring
Transferring risk involves the contractual shifting of risk from one party to another. Purchasing an insurance policy transfers a specified threat from the policyholder to the insurer.

● Loss prevention and reduction
Loss prevention and reduction are used to minimize financial risk. This requires identifying the factors that increase the likelihood of a loss and then working to either eliminate or minimize their effect. Visiting your doctor for routine physicals regularly, eating a healthy diet and exercising are all methods that people employ in an effort to prevent or reduce the potential for loss.

Financial risk management solutions


We always have an eye on the long-term, and work proactively with our clients to develop sustainable financial plans that factor in various types of risk that can be addressed using the techniques described above. We can review our clients’ current coverages in an effort to help them better understand their workplace benefits, their property and casualty coverages, life, and long term care insurance, to name a few. We encourage them to communicate with their insurance professionals to determine if they are currently carrying the right level of coverage and to review the costs associated with their coverage.

Risk is unavoidable. How one manages the various financial threats they are exposed to can make a big difference in the outcomes they achieve as they work to accomplish their goals for protecting their financial future. At HCR, we utilize our risk management process to help clients better understand the potential dangers they are subject to, the solutions they may have available and how they might address the risks associated with each of their unique situations.
 

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