Managing Personal Risk in an Era of Rising Wealth and Proliferating Threats

Abstract

Advancements in technology, globalization and the American legal system are increasing the frequency and financial severity of personal risks. People today are threatened by diverse risks that previously did not exist. Financial security can be jeopardized as a result of identity fraud, Internet use and extensive travel schedules. As individuals accumulate wealth, complex risks emerge from the ownership of homes, luxury automobiles, boats, fine art and other valuable possessions. Potential liability can also arise from a variety of sources, including employment of domestic staff, participating as a director on the board of a nonprofit entity, or the sale of a business. Never have personal risks been more challenging or financially perilous. Loss exposures are occurring at a rapid rate, materially affecting the goals of wealth accumulation and asset preservation. As individuals mature, their risk profiles change dramatically. By the time people reach middle age, an uninsured or underinsured risk-based financial loss can be devastating, costlier in many cases than a plunge in the value of an investment portfolio. To nurture and protect personal assets, health and security, individuals must develop a holistic personal risk management program, which would compliment and enhance any of their financial plans.