In Engineering the definition is put simply:
RISK = (PROBABILITY OF RISK OCCURRING) X (IMPACT OF RISK OCCURRING)
This begs the question for us all; How Risky is My Financial Life? Put more dramatically, To What Extent am I Risking Bankruptcy or Financial Hardship?
Factors that I am going to take into consideration to determine this are:
- Allocation of Financial Assets
- Employment Status and Stability
- Alternative Income Status and Stability
- Debt Level
- Time Horizon
- Area and Country of Residence
- Cost of Lifestyle
- Definition of Risk
- Flexibility of Lifestyle and Skillset
- Current Net Worth and Income Potential
- Untapped Resources
Readers are encouraged to provide comments and opinions on financial risk as I go through the process.
What defines Financial Risk? How Do I Guard Against Financial Risk? What Put Us In a Good or Bad Position? Generally, Whom Among Us Are Leading Risky Financial Lives?