We live with the chance of fundamental, life-changing events occurring every day;  an accident, loss of income, health problems, outliving savings, loss of self esteem, the list is long.   It is not something that you can avoid but you can be protected.  The questions are by whom?  And how?

Not long ago risk was shared among corporation, government and the individual.  Over time, risk has been pushed more and more to the individual.   Corporations have limited their insurance coverage of employees due to abuses of claims and bottom-line pressures.   Budget constraints are forcing governments to cut back many basic services and raise taxes.   Whereas financial constraints have forced individuals to stop planning for and insuring against life-changing events and simply carry costs of loss personally.

As we go forward, more and more risks will be put back upon the individual’s lap.  Social Security and Medicare is in trouble.   Those of us who are under 60 cannot depend that these programs will be around when we retire.  Additional taxes will probably have to be collected from us to keep the programs from bankruptcy in the next 10-15 years.

A new expensive entitlement program just passed, the Health Care Bill.   No matter what changes that may occur in the aftermath, universal health care is now the law of the land.   Its supporters promised the bill would save money.  Those savings are supposed to pay for the program but the assumptions are based on everyone in the US following a specific behavior.   How likely is that?   If the projected savings don’t happen, the health risk of everyone in America will be spread out to all of us in the form of additional taxes.

Identifying and managing risk is a critical part of ensuring peace of mind and protection for your family.   Otherwise, random luck, taxes, economic problems and inflation will bury us.   If done correctly, the tools to manage risks can also help you get financial security and wealth.

© 2010 MoneyandRisk.com