Disposal

In order to deal with risks existing in ordinary life, there are four steps you have to take. I’m sure that you understand the importance of identification and evaluation. Particularly, identification is the most significant step in PRM in the sense that nothing starts if you can’t recognize risks. At the first stage, I put the emphasis on the imaginative power to identify risks. It’s no exaggeration that PRM depends on how well you can identify risks with full imaginations. And then, you evaluate them by the method of how seriously the risks are influential. Here is a stage where you dispose of risks.

There are manly two categories in the disposal. One is risk financing. The other is risk control. The farmer focuses on how to do with the risks that come out as actual damages. More circumstantially, there are two more types of dealing with the risks, transfer and retention in the category of risk financing.

The most popular way of transferring risks is to take out insurance. Some people still have an antipathy against insurance or insurance pushy sales persons. As for insurance itself, partly resulting from the misunderstanding of the difficult policy wordings, they believe that insurance policies don’t cover the risks the policy holders need just in the cases. For sales persons too, it seems worldwide that they have negative images for aggressive approaches. The function of insurance, however, has played an important role in the modern societies. You can be saved financially by insurance. Today there are so wide ranges of product lineups provided by insurance companies that you can be compensated for many of the risks existing in routine life. Not different from old days, sales persons nowadays give you good advice on how much the coverage should be or what effective way of taking out insurance. Furthermore, they explain exemption calluses regardless of it's obligatory or not. Of course, it’s necessary to consider how much you can pay the premium. You better transfer risks to insurance as possible by looking for professional advice.

Tuning to the other category in the risk financing, retention is one method. This type of risk financing, however, is used mostly for CRM (corporate risk management). In order to reduce the huge costs of insurance premiums, companies often retain some risks without transferring to insurance. This can be done partly because companies have abundant cash to retain risks to some extent and partly because the effects of retention are apparent by setting the high deductive of insurance coverage. PRM, contrarily, does not need this method. Although the risks that cannot be covered by insurance are applicable or almost forced to be chosen, as long as risk financing is concerned, it’s wiser to transfer risks by taking out insurance.

Insurance, however, can't save you perfectly, exactly saying, can't prevent incidents that would give impact on your life. Actually it’s a very effective way of dealing with risks after something happens. As I repeatedly mention, you are saved financially with insurance. For example, car insurance covers the legal liabilities just in the case that you cause a traffic accident (packaged car insurance provides a wide range of coverage such as driver's bodily injury or car body). As for you own properties, fire insurance pays for your burned out house. Thanks to the insurance, you can continue to live without worrying about lodging.

Insurance is also helpful to your life in terms of providing peace of minds. If you can image too many risks, you may hesitate to behave for fear of the risks. But you can make challenges to do something with the feeling of taking out insurance despite it’s post-accident measures. There are, of course, a lot of things in the world that can’t be compensated by insurance such as the life of your own or families, trusts in human relations, time, mementos and so on. These aren’t not retrievable once you lose. Therefore, it’s necessary to take preventive measures before something happens. You have to think that insurance is the final resort.

For the other category than risk financing, there is risk control at the stage of disposal. This category focuses on prevention. In order, risk control should be first and then risk financing comes after. To put emphasis on the importance of preventive measures, I intentionally move this category to the last. Anyway, Let’s get down to business.

You may fully understand the importance of identification in PRM as I emphasize many times. The next most important is risk control. Even though you can identify risks with full imaginations, you can't secure the safe life unless you control the risks you find. Namely, it's not until you dispose of the risks that PRM works. The single stage of the identification, nevertheless, could let you take preventive actions instinctually and subconsciously against the upcoming risks. If you can identify a big risk in seemingly dangerous behaviors, you naturally decide to stop that without thinking of how to prevent. This comes from the human instinctual functions developed since primitive ages. As you often experience, if you feel risks, you choose the proper methods of risk control unconsciously. But in today's world that mixes any kinds of uncertain risks, it's another risk to rely on human instincts. Here is a necessity to deal with risks more systematically even in personal life.

To introduce the methods of risk control, there are mainly four types in risk control, avoidance, prevention, reduction, and scattering. You have to choose the proper methods in the situations where you face risks. Of course, there are circumstances under which you make a good combination of them to cope with risks.

First of all, avoidance is the one that you just avoid the risks. When you identify a particular risk and you evaluate that the behavior of taking the risk doesn't match the result at all, you may stop doing that. This seems to be a very easy and effective method in risk control because you just don't do that. There are, however, a lot of things to do in daily life. Even if you can identify the risks in your particular behavior, you can't avoid many of them. You have to get to work. You have to eat something. You have to go shopping. And you sometimes go somewhere else for pastime. Among these unavoidable behaviors, of course, you can avoid certain risk only this time or just today because you are tired after overwork or natural conditions are very bad today. There is another disadvantage in the disposal, for instance, you can avoid driving to work instead you get to work by train. But you may face another risk of taking a train even though one way of avoidance is successful. Here is a dilemma in disposing of risks.

Nevertheless, avoidance is an effective method in PRM for the reason that personal behaviors don't always look for the clear results of profits or productivity. Let's image what you expect the result of your behavior you are just starting. At the same time, do think of what you will lose just in the cases that the risk comes out. This kind of decision is finally up to you. However, if you can't apparently find the good balance between results and risks, it's wiser to avoid it once.

The next thing you should do in the situations particularly where you can't avoid is prevention. Health risks, for example, are the most careful one in your personal life. More people nowadays try to eat healthy foods such as vegetables, organically grown foods. At the same time, those people carry out one of the PRM methods or avoidance as I explain already. Namely they try to avoid oily foods that don't seem healthy. Or if you strongly image that secondhand smoke is really bad to your health, you don't hesitate to say "Please refrain from smoking here" or you may just keep away from the smokers.

Besides of the method of avoidance, saying preventive measures for health, some people take good exercise to promote metabolism or the circulation of blood to keep health. You must be taking preventive measures not only for health risk but also for others such as in-house risks. Furniture, for example, is fixed fast to walls not to fall down just in the case of earthquakes. Furthermore, since there have been more violent crimes today, more people take preventive measures for home security. Despite of the recognition for prevention, I wander how many people take costs for security and how much money they take for it. The nature of risk is so uncertain that few people want to pay for the things of highly low probabilities. But it could happen to you and you have to have in minds that there are costly and costless measures. You should do come up with costless preventive measures. If necessary, you dare to pay for it within your budget. What's important in PRM is that you keep in mind it could happen to you. Safety is the one that you protect by yourselves.

Thirdly, reduction is one of the methods at the stage of disposal. This is also an effective way particularly in the case that a risk is not avoidable and it’s still risky despite of taking possible preventive measures. Smoking, for example, is a habit that many smokers want to stop if possible. Although those smokers know smoking could harm their health, the reality is that they have not been able to stop it. Some smokers struggle to stop it many times. However, to stop smoking is an extremely difficult. What those smokers think of is to change to lighter cigarettes. There is controversy over how the risk can be reduced even by switching to lighter ones. In principal, if the amount of nicotine in one cigarette decreases, the risk of being exposed to cancer will also decrease. What’s important in this method of reduction is how risks are evaluated. In the case of smoking, the reduction can be based on the assumption that there must be a linkage between nicotine and cancer risk. Therefore the cancer risk should be evaluated by the amount of nicotine to some extent.

Finally one more method in the category of risk control has to be explained. It’s scattering. As you may often hear, there is a saying “Don’t put all eggs in one basket”. Scattering is exactly the idea in the saying. In the situation in which you place the basket somewhere with all eggs, if the basket fall down onto the ground, all the eggs will be crashed. If you scatter the eggs into some baskets, however, the rest of the eggs will be safe even though one basket collapses. This method is well-known in the field of investment as portfolio management. When you invest your financial assets into some funds such as stocks, bonds, mutual funds, banking deposits and so on, portfolio management is a very wise and popular way of investing money. By scarring the precious assets into some different funds, you can enjoy the fruits of interests from the well-combined sources and simultaneously reduce the risks of losing money from a single source.

You can make the most of this method in daily life except investments as well. For instance, where do you hide your spare keys at home? Some of the most important keys such as the ones to safes, entrance doors or else must be kept in the safest and nearest place to you. You may put them in safe-deposit boxes at banks. You may put them in your purses with you if they are not so many. But it seems that many people recklessly put them into the drawers of furniture at home. What is worse, all of the spare keys are put together. In this case, if a thief trespassed your home and found the spare keys at once, what would happen? Stolen would be your important assets in a safe, your luxurious car, and all the things that can be open by your spare keys. The significant staff such as documents, customer lists for your job could be stolen by intruding your office. If you can’t afford borrow a safe-deposit box or you feel it troublesome to do that, you carry out an inexpensive and easy method of PRM by scattering your spare keys into different places. Although everybody understands this basic preventive measure just in cases, in realty he or she is too busy every day to do that simple risk management.

As these four types are introduced above at this stage of disposing of risks, it’s idealistic to use them with good combinations in appropriate situations. The reality as I mention is that people forget it mostly by concentrating on the very thing you are going to do. Please recall the PRM methods I have been explaining. It's not troublesome. To review the whole method, the point in PRM is that you keep in mind that there are risks by the method of identification and you try to think of how to control them consciously.