Patchwork Economics - Risk Assessment

Risk (n) A chance or possibility of danger, loss, injury, or other adverse consequences.
Source: The Concise Oxford Dictionary, Ninth Edition

Assessing your vulnerability to risk is a quick and simple process. Determining how to build resilience into your lifestyle so you can either reduce the risk or lessen its impact, is a little trickier.

What are the potential risks to your financial well-being? You might be surprised at the list!

Here’s a few to get you thinking:

Economic Recession/Depression/Collapse
The economic environment in which we live is completely and utterly beyond our control. We cannot change the environment but we can change the way in which we’re affected by it.

Unemployment
If the company you work for decides to downsize in order to show their shareholders a profit, your job could be gone. What then?

Keeping a roof over your head (literally!)
If you are lucky enough to have a home of your own, whether or not you carry a serviceable mortgage, what happens when general wear and tear over time brings about the need for a major repair job; like replacing the roof? Do you have the money to get it done? Do you even know how much it would cost?

Increasing Fuel Prices
Even the International Energy Agency admits that we’re already seeing the effects Peak Oil (where production exceeds demand) in their recently published World Energy Outlook 2010. When demand outstrips supply, prices go up. If the price of petrol (gas) doubles, how much will it cost you to get to work? What sort of impact will it have on the basics that you buy regularly, food for instance?

Increasing Energy Prices
We’re already seeing ongoing rises in electricity prices. At what point will using electricity to keep you warm or cool become a luxury you can’t afford?

These are just some of the big picture issues that we all face. I guess you could say these are the big rocks that we need to deal with first. As you begin to ponder these issues, I’m sure you’ll be able to fill in the specifics with details from your own experience and add some colour from your own lifestyle. At first they might just seem like headlines but as you place them into the context of your own life they will become personal.

Tomorrow, I’ll share with you some of the steps I’m taking to ensure financial resilience for myself and my family. I hope it will help spark some ideas for you to use.