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Risk Management

As you develop and implement your financial plan, its important to protect your finances from the negative impacts of unfortunate events. Risks such as stock market volatility, an unexpected disability from accident or illness and a premature death can wreak havoc on your personal and family finances. A critical element of financial planning is the management of risk.

One of the most popular ways to manage financial risk is through the purchase and use of insurance. Insurance protects its policy holders from large and unexpected financial losses, by compensating them, per their contractual obligation. This form of risk management is often referred to risk transfer.

A second common way to protect against potential loss is risk avoidance. In life, many risks and their consequences are unavoidable, however we can choose to avoid some risks by making different choices in life. In example we can help avoid long-term health care problems by living an active and healthy lifestyle. In addition we can avoid devastating injuries by wearing seat belts.

Risk management is an important part of the financial planning process. Without the proper risk management tools you and your way of life are exposed to potential large financial losses


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