Friday, July 22, 2005

Foreseeing the Unforeseen

Integrating a comfortable level of preparedness activities into our lives is something ALL of us should do. To fail to do so is to accede our future well-being to the government and in fact to trust our very lives to the bureaucracy's ability to provide for all our needs in the event of any potential calamity, large or small.

For many who hesitate to devote any time or money to mitigating their own disaster risk, it might be that they are not cognizant of the actual risks. As a former gambling addict, I can sympathize. After all, without full understanding of the odds, you're doomed to lose in the end. And in this game, we all have a big stake in each other's hand--if there are too many losers out there, we can all end up worse off.

Risk assessment and risk management--it's big business across the globe. Nations, corporations, and organizations are fully invested in these disciplines in an effort to minimize the effects of disaster of all kinds. Of course, there is little to be done to fully avoid most potential calamity--after all, how much control do we really have over the bigger picture? So what it comes down to, when the worst does happen, is how well-positioned one is to recover.

Individuals are well-rooted into this global multi-billion-dollar risk-management leviathan with their various insurance policies--life, health, auto, home, and more. Still, even when fully insured, there remain substantial gaps in "coverage" if a household is not actively working to manage and mitigate their day-to-day and long-term risks.

What Risk?

Positioning your family to be able to survive potential calamities is a basic, common sense responsibility. Given the wide range of possible dangers out there, it can seem overwhelming and pointless. But the good news is that many things you would do to prepare for the disasters likeliest to transpire will translate well to all of the other risks as well.

First, let's simply list the types of risk we might want to consider, if not actually specifically prepare for (you can add to the list depending on your own situation):

Widespread or localized
Man-made:
Terror attack
Acts of war
Economic upheaval
Civil strife
Power blackout
Hazardous material accident
Natural disaster:
Earthquake
Hurricane
Tornado
Volcano
Tsunami
Blizzard or Ice storm
Wildfire
Drought/food shortage
Disease pandemic
Personalized
Criminal assault or trespass
Sudden loss of income
Physical disability
House fire
A major global reinsurance company, Swiss Reinsurance, provides periodic public information and analysis through their SIGMA publication, as well as through other vehicles. Their statistics show that, in 2004, insured global losses approached $50B US, and almost all of that total was from natural disasters.
The staggering general trend in insurance losses, measured at 2004 price levels has risen from only $2B in 1971. In the last 15 years, total annual losses have shown a clear majority of losses to occur as the result of natural catastrophes ... other than in 2001 when the losses of 9/11 dwarfed that year's acts of nature.
What does this tell us? Well, if I was still a betting man--and of course, in a sense I am since I am looking to mitigate my household risk and maximize the possibility for a winning future--I would start my disaster preparedness with an eye toward the types of natural disasters that I am vulnerable to in my geographic region. (On the other hand, if I lived in New Your City, Washington, D.C., or London, I would probably initially focus on terror risks.)
Where to Start Preparing
Much more on this in future posts, but a good starting point in preparing for most bad scenarios is to be sure to be able to provide for your family's most basic human needs: drinking water, food, and shelter. I'd also throw in special health-concern considerations--as in assuring access to prescribed medications, etc.
There are many ways to look at each of those needs, and how you approach them is dependent upon where you live and other factors such as how much "disposable income" you have, if any, to invest in preparedness.
Of course, past those basic survival accommodations there are other simple measures that can be taken to make disaster recovery far easier to accomplish, such as records and physical asset protection and electrical power storage and generation.
Then, beyond the widely applicable, common-sense crisis-planning moves, there are a multitude of special-needs tactics that can help you prepare for specific risks, given your situational planning.
There's much to think about, yes, but taking the most important first steps are not at all difficult.

2 comments:

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macten_1 said...

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