After you have ascertained the risks, you can manage them with 4 general approaches: Avoid, Reduce, Retain, and Transfer. Some dangers, such as armed hostilities in foreign countries, can be avoided by doing prior research and changing travel plans. Reduce your risk by limiting exposure to undesirable factors or activity, e.g. cutting your sugar intake to lower the chances of contracting diabetes, lowering your investments in oil when prices are volatile.

Risk retention is another strategy, whereby you undertake the risk instead of managing it. This is a feasible solution when the cost of minimising the risk far outweighs its consequences. Alternatively, transfer the risk to other parties or entities that can provide protection or compensation when the risk becomes a reality. Insurance is a prime example of risk transfer.

Quality insurance can help preserve your hard-earned savings and offset a considerable percentage of medical expenses if you require hospitalisation and medical treatment. It can also provide replacement income in the event that an accident robbed you of the ability to continue working. This is particularly vital, as the risk of disease inevitably increases with age.

If you have an elevated risk of a major illness, such as cancer or heart attack, consider critical illness insurance. It provides a lump sum payout when you are first diagnosed with a critical illness covered by the policy, so that you can receive proper treatment in the early stages of diagnosis. Most policies cover a maximum of 30 of the most common conditions, including stroke, coronary artery bypass surgery, and organ failure.

Income replacement schemes, such as a disability income insurance plan, will ensure that you and your family still receive a monthly income to keep up with commitments when you are unable to work due to an accident or illness. It pays up to 80% of your average monthly salary to alleviate your financial difficulties of income loss. You can still receive lowered, partial income from the policy when you have shown recovery, or if you found work that pays less than before the disability. That way, you can minimise the risk of a meltdown of your household finances, such as living expenses, mortgage servicing, and insurance premium payments.

As with financial planning, financial risk management is best administered by qualified and reliable professionals. Our team members at YTA are trained in this area to offer quality advice to individuals and businesses alike. We will first assess any inherent risks and provide solutions to mitigate them. All you need to do is complete the form at the ‘Contact Us’ page and we will get in touch with you shortly.