If you have been living under a rock for the past month or so, COVID-19 or the latest iteration of the disease caused by human coronavirus is all the talk. With tens of thousands infected and thousands of deaths already, everyone is wondering what to do. As of the latest WHO situation report the global risk level is “Very High.” This brings us to the question of what we can do for personal risk management. How can we mitigate our risk without trapping ourselves in our homes?
Risk Management in Everyday Life
When I get into a car the first thing I do is put on my seat belt. Why? Well if we get into a car accident I don’t want to get thrown from the car. Does this mean I think we are going to get into a car accident? No. It just means I am mitigating the risk of death if we do. No one looks down upon you for putting on your seat belt.
The same thing can be said for cooking food, it reduces risk. Can you eat meat raw? Sure. Should you? Probably not, because the risk of contracting some disease that is lying dormant in the meat is too high. We need to learn risk management in order to live our lives.
Risk Management does not mean locking yourself inside your house. It means understanding the risks associated with a behavior and making the downside potential as low as possible. With COVID-19 running rampant around the world it is important that we mitigate our potential exposure and risk as much as possible.
Everyday Risk Avoidance
The World Health Organization came out with some basic steps for the public to avoid contracting COVID-19. They include washing your hands, maintaining social social distance of those who are coughing or sneezing, avoid touching your eyes, nose and mouth and seeking medical care if you are sick. Seems like no common sense right? Everyday risk avoidance is mostly common sense but it is important to reiterate. These are all sound practices for taking care of your health in everyday life.
We have also watched the market take a tumble lately. If you are invested in triple leveraged ETFs, or options than you are probably hit more so than worse. Hopefully that strategy was part of your risk management strategy. Otherwise you might end up looking foolish. Something I have been telling to all my friends is that, “time is the best risk management strategy for those that know no better.” What I mean by that, is that if you are invested in a long period of time than the market will have up and downs. The trick is to stay the course and believe in averages as long as past performance is truly indicative of future performance.
Another example is just avoiding everyday risk. When you are driving down the road you can avoid doing double the speed limit to dramatically reduce your likely hood of being involved in a car accident. If you do your job well at work it will dramatically reduce the odds of you being fired at work. If you commit yourself to loving and supporting your significant other than you are on the right path to building a long lasting relationship. We practice risk avoidance in our everyday behaviors without even realizing.
Preparing for the Worst
Sometimes the best risk management strategy is just to prepare for the worst case scenario. Afraid of losing your job? Well then you should have at least a year’s worth of expenses saved so you can survive while you find a new job. Do you think the apocalypse is coming? Then you can start learning skills and stockpiling materials that may be useful for that time.
I am not saying you are going to lose your job or that the apocalypse is coming, I am just stating possibilities. Only you can decide your risk management strategy and how prepared you want to be for a disaster. I personally lived through a major natural disaster that luckily my family was well prepared for. However, some of my neighbors were not. Now this only last a week and we were able to come together as a community but I do fear what would happen if that went on longer. That is why I am prepared not only for a financial disaster effecting me personally but also a state emergency in which I have to be self sufficient for an extended period of time.
It is also important to understand the importance of communication and relationships in your worst case scenario plans. If you think you can take on the world and win, hats off to you. It just sure is going to be lonely when there is no one there with you. When preparing for emergencies, include people living with you and loved ones. Address their fears and concerns as well. The more situations you all are prepared for the more confident you will be living your everyday lives.
Sleeping Well at Night
In conclusion, it all comes down to sleeping well at night. Your risk management strategy needs to provide enough security that you can sleep soundly without fear of what will happen. You also need to be able to fall asleep without worrying about what you could have done. As with everything in life, it is a balancing act. As goes the old Persian adage, “This too shall pass” and if not then we have bigger fish to fry.
How are you handling current global diseases and markets? Are you employing any particular risk management strategies? Let us know in the comments below!