Risk Tip: 2 important tenets of risk management
Don’t risk more than you can afford to lose…& don’t risk a lot for a little.
Comment: These two are both basics – the first refers to the idea that if you don’t have enough money to pay for the exposure to loss (risk) out of your pocket/balance sheet, then insure for the risk, transfer the risk or avoid the risk. This becomes the client’s comfort level with the risk at hand. Some companies are very comfortable with risk – they plan for it and manage it. Some companies are very uncomfortable with risk and want to chance nothing.
The second has to do with the fact that a business organization can protect vast fortunes and assets for a relatively small amount of money, comparatively speaking. That would be the prudent move for any business owner.
Bottom line: Everyday and in just about everything we do we are faced with risk. Sometimes we choose to take the risk – sometimes we are a little more conservative. No matter how big or how small the business, we all must make choices relative to appropriate risk tolerance for that business. Therefore we must know what those risks are and what the choices and alternatives are to better protect the business organization.