| Action Group - Action Financial Management - Risk Management | |
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Financial Management | Mortgage Service | Life & Health Insurance | Home & Auto Insurance | Realty | Travel Services |
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Action
Group home
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Risk
Management There
are two kinds of risk a client must consider: (1) "business risk," (or
"speculative risk") which is the chance of either loss or gain, as in
business or investment activities; and (2) "pure risk," which is the
chance of loss from fortuitous events, with no offsetting opportunity
for gain. With business risk, money, labor, or other resources are
invested with the hope of profit, but with the possibility of loss as
well. With pure risk, there is only the possibility of either loss or no
loss from the occurrence of an unforeseen event, a fire, an earthquake,
an accident causing physical injury or property damage, or whatever,
with no opportunity for gain from the occurrence.
The financial planner is well acquainted with business risk, and deals with it constantly in advising clients on investment choices, balancing opportunity for greater or smaller gain with increased or decreased risk of possible loss. Less familiar to the typical financial planner is the management of pure risk. Everything the client has acquired and planned can be lost in an instant through an unforeseen disaster. But it is unnecessary for a client to expose assets, earning power, and financial plans to disappointment and failure when, with adequate planning and foresight, the cost of protecting financial security is well within reach. All possible loss exposures to property, life, health, earning capacity, and financial assets, from the obvious or commonplace----fire, windstorm, automobile accident, premature death, etc., to the remote or farfetched----e.g., being struck by a falling meteorite, should be considered as well as their possible consequences, both in terms of likelihood or frequency of occurrence and evaluation of the worst possible severity. From this list, with maximum loss amounts shown, choices as to what risk management techniques to employ can be made. |
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191 North Avenue, Mount Clemens, MI
48043 |