Showing posts with label risk. Show all posts
Showing posts with label risk. Show all posts

Friday, August 22, 2008

how risky is my financial life?

According to Wikipedia - Risk is a concept that denotes a potential negative impact to some characteristic of value that may arise from a future event, or we can say that "Risks are events or conditions that may occur, and whose occurrence, if it does take place, has a harmful or negative effect". Exposure to the consequences of uncertainty constitutes a risk. In everyday usage, risk is often used synonymously with the probability of a known loss.

In Engineering the definition is put simply:

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
  • Age
  • Health
  • Debt Level
  • Dependants
  • 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
  • Others....

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?