There is a four letter word that seems to be haunting everyone during this period of economic readjustment (aka recession), one that is certainly not a new word but one that has been forgotten over the ‘golden years'.

That four letter word is ‘RISK'. You see when times were good people didn't really need to worry about RISK; instead they were more worried about the opposite side of RISK; reward & returns. Businesses were confidently growing, adding more debts and overheads. Mums and Dads were following the advertised seminars and buying rental properties to fund their ‘golden years'. Now was there really anything wrong with that I hear you ask? In short, no, however, most of these people were not concentrating on the RISK, only on the reward.
So what happened next? After any period of ‘golden times' there will inevitably be either a rest period or a period of economic adjustment. This period of adjustment has caught those who were swimming naked when the tide went out. In other words, it exposed those who had failed to take into account the RISK.
So what lessons can we learn from the current period of ‘economic adjustment?' The first and biggest lesson is to be sure never to forget the four letter word that will ultimately determine your future; RISK. Be it a business or personal decision, make sure to weigh up both sides of the equation.
Then take the time to analyze what the actual RISK is. Ask yourself, can this RISK be minimized? If so, how? The obvious means of minimizing the risk is to reduce the factors you have control over or transferring the risk to a third party such as an insurance company. By paying a small premium to the insurance company you are automatically helping to reduce your overall RISK profile and whilst you can't insure against all risks you can certainly help to reduce many.