risk

Topics: Insurance, Risk, Bank Pages: 2 (640 words) Published: October 10, 2014
Risk is part of life : I face countless danger everyday driving to work. sure I can try minimize many of them through my own driving behavior . but I can’t prevent motorist behind me who is talking on his mobile from rear-ending me while I’m waiting at a stoplight. As much as we would have it otherwise, risk is part of life. Some risks can be averted by steering clear of them. Many are, however, unavoidable. False sense of security Sometimes you can insure yourself against the consequences of risks. While this doesn’t mean the risks will automatically vanish, it does mean other parties will bear all or part of the consequences. It is the insurance companies’ responsibility to control those consequences. This means, providing I pay my premiums on time, they will fully pay the costs for accidents like the one above. Even if the telephoning culprit does not earn a penny. The danger with insurance is that it can create a false sense that risks no longer exist. I came across a fantastic example of this recently at a Dutch political party’s brainstorming evening. The topic was the future of the banking industry and I and several others were asked to attend as advisers. It was an interesting experience. The ‘specialist’ from the related political party turned out not to have the foggiest idea of all the things banks do. That made it tricky. Because if you’re going to talk about the future structure of the banking industry, it helps if you know something about financial brokerage, the difference between savings, payments and loans and so on. Be aware of the risks you run One of this ‘specialist’s’ unyielding standpoints was that bank customers should not run any risks whatsoever. But that is clearly hard to achieve. Because if you were to take all the risks away from customers, who would end up holding the risks? First the providers of risk-bearing capital of course, but that is already the case anyway. It really all boils down to the scenarios where there is...
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