financial risk management personal statement

Financial Management Personal Statement Examples

• 1 Personal Statement Example Links
• 2 Career Opportunities
• 3 UK Admission Requirements
• 4 UK Earnings Potential For Financial Managers
• 5 Similar Courses in UK
• 6 UK Curriculum
• 7 Alumni Network

Personal Statement Example Links

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Ever been captivated by the idea of managing funds, optimising investments, and maximising financial growth? Intrigued by the prospect of shaping financial strategies and decision-making processes for businesses?

If so, a degree in Financial Management could be your ideal journey. This dynamic field equips you with the knowledge and skills to navigate the complexities of financial markets, ensuring the financial health and sustainability of an organisation.

Financial Management is a field of study that focuses on the management of money and other financial resources. It is a broad field that encompasses a variety of topics, including investments, banking, insurance, taxation, and more. Financial management is a critical component of any business, and those who pursue a degree in this field will be prepared to take on a variety of roles in the financial industry.

When writing a personal statement for a Financial Management degree, it is important to emphasize your interest in the field and your aptitude for the subject. You should also highlight your relevant skills and experiences, such as any internships or volunteer work in the financial sector. Additionally, you should explain why you are passionate about the field and why you think you would make a great addition to the program.

Career Opportunities

A degree in Financial Management can open up a wide range of career opportunities. Graduates can pursue a variety of roles in the finance industry, such as financial analyst, financial planner, investment banker, and portfolio manager. Other roles in the finance industry include risk management, compliance, and auditing.

Graduates can also pursue a career in banking, such as a loan officer, credit analyst, or bank manager. They may also pursue a career in insurance, such as an insurance underwriter, claims adjuster, or risk analyst.

Those with a degree in Financial Management can also pursue a career in accounting, such as a certified public accountant (CPA), tax accountant, or financial controller.

Graduates can also pursue a career in the public sector, such as a budget analyst, financial analyst, or financial manager. They may also pursue a career in government, such as a financial regulator or financial policy analyst.

Graduates can also pursue a career in the corporate sector, such as a corporate finance manager, financial analyst, or financial controller. They may also pursue a career in the nonprofit sector, such as a financial analyst or grant writer.

Finally, graduates can pursue a career in the financial services sector, such as a financial advisor or investment banker. They may also pursue a career in venture capital, private equity, or hedge funds.

UK Admission Requirements

In order to be accepted into the University Course Financial Management, applicants must have achieved a minimum of a 2:1 (or equivalent) in a relevant degree such as finance, accounting, economics, mathematics, or business.

Applicants must also have achieved a minimum of a grade C in GCSE English and Maths.

In addition, applicants must have achieved a minimum of a grade B in A Level Maths or equivalent.

These entry criteria are similar to those of other courses in the field of finance, accounting, and economics. However, the University Course Financial Management requires a higher level of achievement in A Level Maths than many other courses. This is to ensure that applicants have the necessary skills and knowledge to succeed in the course.

UK Earnings Potential For Financial Managers

The average earnings for someone with a degree in financial management vary depending on the type of job they pursue. Generally, graduates with a degree in financial management can expect to make an average salary of £36,000 to £45,000 per year. However, this can vary significantly depending on the sector and the level of experience.

Recent trends in the job market for financial management graduates show that there is an increasing demand for skilled professionals in the field. This is due to the growing complexity of financial markets and the need for professionals who are able to navigate these markets and provide sound financial advice.

As a result, salaries for financial management professionals have been steadily increasing over the past few years. Additionally, there is an increasing demand for financial management professionals in the banking and investment sectors, which can lead to higher salaries for those with the right skills and experience.

Similar Courses in UK

Other related university courses in the UK include Accounting and Finance, Economics, Business Management, and Business Administration.

The key differences between Financial Management and these other courses are that Financial Management is more focused on the management of money and financial resources, while Accounting and Finance is more focused on the recording and reporting of financial transactions.

Economics focuses on the study of economic systems and the factors that influence them. Business Management is focused on the management of people and organizations, while Business Administration is more focused on the management of processes and operations.

UK Curriculum

The key topics and modules covered in a university course on Financial Management typically include:

• Introduction to Financial Management: This module provides an overview of the fundamentals of financial management and introduces students to the main concepts and tools used in financial decision-making. Topics may include financial statement analysis, budgeting, capital budgeting, working capital management, and risk management.
• Financial Markets and Institutions: This module explores the workings of financial markets and institutions, including the stock market, bond market, and banking system. It also covers topics such as the role of financial intermediaries, the regulation of financial markets, and the role of central banks.
• Investment Management: This module examines the principles of investment management, including portfolio theory, asset pricing, and the evaluation of investment opportunities. It also covers topics such as portfolio diversification, asset allocation, and portfolio construction.
• Corporate Finance: This module examines the principles of corporate finance, including capital structure, dividend policy, and mergers and acquisitions. It also covers topics such as capital budgeting, project financing, and working capital management.
• International Finance: This module explores the principles of international finance, including exchange rate determination, international capital flows, and the management of international financial risks. It also covers topics such as the international monetary system, foreign exchange markets, and international capital budgeting.

Hands-on experience or practical work may involve case studies, simulations, internships with partnering financial institutions, and team projects that mirror real-world financial scenarios. This approach allows students to apply theoretical knowledge to practical situations, enhancing their problem-solving skills and preparing them for a career in financial management.

Alumni Network

Notable alumni from the Financial Management course include Warren Buffett , the CEO and Chairman of Berkshire Hathaway, and Jamie Dimon, the CEO and Chairman of JPMorgan Chase.

Warren Buffett is widely regarded as one of the most successful investors in the world, having grown his company’s value from $19 billion to over $600 billion. He is a philanthropist, donating billions of dollars to charitable causes, and has been a vocal advocate for responsible investing.

Jamie Dimon has been at the helm of JPMorgan Chase since 2004, and during his tenure, the company has grown to become the largest bank in the United States. He is a leader in the financial industry and has been a vocal advocate for responsible banking practices.

Alumni events and networking opportunities are available through the Financial Management course’s alumni network. The network hosts events such as alumni panels, networking sessions, and career fairs for alumni to connect and share their experiences. Additionally, the network offers resources such as job postings and career advice for alumni looking to further their careers in the financial industry.

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5 Ways to Manage Your Personal Finances

• Rakshitha Arni Ravishankar

First, let go of your limiting beliefs about money.

Talking about money can feel awkward, uncomfortable, and even scary. Here are five pieces of advice from our authors on how to feel in control of your personal finances.

• Let go of your limiting beliefs about money.
• Take ownership of your money.
• Always set a timeline for your money goals.
• Build an emergency fund.
• Create a diverse portfolio of investments.

Money can evoke a range of difficult emotions for many of us. This anxiety only grows when we’re living through economically fragile times or don’t come from wealth . It can feel awkward, uncomfortable, and even scary to navigate these feelings when they show up. But know that it’s still possible to make smart decisions that will help you become financially stable .

• RR Rakshitha Arni Ravishankar is an associate editor at Ascend.

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Understanding Financial Risk, Plus Tools to Control It

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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What Is Financial Risk?

Financial risk is the possibility of losing money on an investment or business venture. Some more common and distinct financial risks include credit risk, liquidity risk, and operational risk.

Financial risk is a type of danger that can result in the loss of capital to interested parties. For governments, this can mean they are unable to control monetary policy and default on bonds or other debt issues. Corporations also face the possibility of default on debt they undertake but may also experience failure in an undertaking the causes a financial burden on the business.

Key Takeaways

• Financial risk generally relates to the odds of losing money.
• The financial risk most commonly referred to is the possibility that a company's cash flow will prove inadequate to meet its obligations.
• Financial risk can also apply to a government that defaults on its bonds.
• Credit risk, liquidity risk, asset-backed risk, foreign investment risk, equity risk, and currency risk are all common forms of financial risk.
• Investors can use a number of financial risk ratios to assess a company's prospects.

Understanding Financial Risks for Businesses

Financial markets face financial risk due to various macroeconomic forces, changes to the market interest rate, and the possibility of default by sectors or large corporations. Individuals face financial risk when they make decisions that may jeopardize their income or ability to pay a debt they have assumed.

Financial risks are everywhere and come in many shapes and sizes, affecting nearly everyone. You should be aware of the presence of financial risks. Knowing the dangers and how to protect yourself will not eliminate the risk, but it can mitigate their harm and reduce the chances of a negative outcome.

It is expensive to build a business from the ground up. At some point in any company's life the business may need to seek outside capital to grow. This need for funding creates a financial risk to both the business and to any investors or stakeholders invested in the company.

Credit risk —also known as default risk—is the danger associated with borrowing money. Should the borrower become unable to repay the loan, they will default. Investors affected by credit risk suffer from decreased income from loan repayments, as well as lost principal and interest. Creditors may also experience a rise in costs for the collection of debt.

When only one or a handful of companies are struggling it is known as a specific risk . This danger, related to a company or small group of companies, includes issues related to capital structure, financial transactions, and exposure to default. The term is typically used to reflect an investor's uncertainty about collecting returns and the accompanying potential for monetary loss.

Businesses can experience operational risk when they have poor management or flawed financial reasoning. Based on internal factors, this is the risk of failing to succeed in its undertakings.

Many analysis identify at least five types of financial risk: market risk, credit risk, liquidity risk, operational risk, and legal risk.

How Governments Offset Financial Risk

Financial risk also refers to the possibility of a government losing control of its monetary policy and being unable or unwilling to control inflation and defaulting on its bonds or other debt issues.

Governments issue debt in the form of bonds and notes to fund wars, build bridges and other infrastructure and pay for their general day-to-day operations. The U.S. government's debt—known as Treasury bonds—is considered one of the safest investments in the world.

The list of governments that have defaulted on debt they issued includes Russia, Argentina, Greece, and Venezuela. Sometimes these entities only delay debt payments or pay less than the agreed-upon amount; either way, it causes financial risk to investors and other stakeholders.

The Impact of Financial Risks on Markets

Several types of financial risk are tied to financial markets. As mentioned earlier, many circumstances can impact the financial market. As demonstrated during the 2007 to 2008 global financial crisis, when a critical sector of the market struggles it can impact the monetary wellbeing of the entire marketplace. During this time, businesses closed, investors lost fortunes, and governments were forced to rethink their monetary policy. However, many other events also impact the market.

Volatility brings uncertainty about the fair value of market assets. Seen as a statistical measure, volatility reflects the confidence of the stakeholders that market returns match the actual valuation of individual assets and the marketplace as a whole. Measured as implied volatility (IV) and represented by a percentage, this statistical value indicates the bullish or bearish—market on the rise versus the market in decline—view of investments. Volatility or equity risk can cause abrupt price swings in shares of stock. 

Default and changes in the market interest rate can also pose a financial risk. Defaults happen mainly in the debt or bond market as companies or other issuers fail to pay their debt obligations, harming investors. Changes in the market interest rate can push individual securities into being unprofitable for investors, forcing them into lower-paying debt securities or facing negative returns.

Asset-backed risk is the chance that asset-backed securities—pools of various types of loans—may become volatile if the underlying securities also change in value. Sub-categories of asset-backed risk involve the borrower paying off a debt early, thus ending the income stream from repayments and significant changes in interest rates.

In 2021, the U.S. high yield default rate finished at a record low 0.5%. 2022 and 2023 projections by Fitch Solutions anticipates continual lower than average default rates.

How Financial Risks Impact Individuals

Individuals can face financial risk when they make poor decisions. This hazard can have wide-ranging causes from taking an unnecessary day off of work to investing in highly speculative investments. Every undertaking has exposure to pure risk —dangers that cannot be controlled, but some are done without fully realizing the consequences.

Liquidity risk comes in two flavors for investors to fear. The first involves securities and assets that cannot be purchased or sold quickly enough to cut losses in a volatile market. Known as market liquidity risk this is a situation where there are few buyers but many sellers. The second risk is funding or cash flow liquidity risk. Funding liquidity risk is the possibility that a corporation will not have the capital to pay its debt, forcing it to default, and harming stakeholders.

Speculative risk is one where a profit or gain has an uncertain chance of success. Perhaps the investor did not conduct proper research before investing, reached too far for gains, or invested too large of a portion of their net worth into a single investment.

Investors holding foreign currencies are exposed to currency risk because different factors, such as interest rate changes and monetary policy changes, can alter the calculated worth or the value of their money. Meanwhile, changes in prices because of market differences, political changes, natural calamities, diplomatic changes, or economic conflicts may cause volatile foreign investment conditions that may expose businesses and individuals to foreign investment risk.

Pros and Cons of Financial Risk

Financial risk, in itself, is not inherently good or bad but only exists to different degrees. Of course, "risk" by its very nature has a negative connotation, and financial risk is no exception. A risk can spread from one business to affect an entire sector, market, or even the world. Risk can stem from uncontrollable outside sources or forces, and it is often difficult to overcome.

While it isn't exactly a positive attribute, understanding the possibility of financial risk can lead to better, more informed business or investment decisions. Assessing the degree of financial risk associated with a security or asset helps determine or set that investment's value. Risk is the flip side of the reward.

One could argue that no progress or growth can occur, be it in a business or a portfolio, without assuming some risk. Finally, while financial risk usually cannot be controlled, exposure to it can be limited or managed.

Financial Risk

Encourages more informed decisions

Helps assess value (risk-reward ratio)

Can be identified using analysis tools

Can arise from uncontrollable or unpredictable outside forces

Risks can be difficult to overcome

Ability to spread and affect entire sectors or markets

Tools to Control Financial Risk

Luckily there are many tools available to individuals, businesses, and governments that allow them to calculate the amount of financial risk they are taking on.

The most common methods that investment professionals use to analyze risks associated with long-term investments—or the stock market as a whole—include:

• Fundamental analysis , the process of measuring a security's intrinsic value by evaluating all aspects of the underlying business including the firm's assets and its earnings.
• Technical analysis , the process of evaluating securities through statistics and looking at historical returns, trade volume, share prices, and other performance data.
• Quantitative analysis , the evaluation of the historical performance of a company using specific financial ratio calculations.

For example, when evaluating businesses, the debt-to-capital ratio measures the proportion of debt used given the total capital structure of the company. A high proportion of debt indicates a risky investment. Another ratio, the capital expenditure ratio, divides cash flow from operations by capital expenditures to see how much money a company will have left to keep the business running after it services its debt.

In terms of action, professional money managers, traders, individual investors, and corporate investment officers use hedging techniques to reduce their exposure to various risks. Hedging against investment risk means strategically using instruments—such as options contracts—to offset the chance of any adverse price movements. In other words, you hedge one investment by making another.

Statistical and numerical analysis are great tools for identifying potential risk, but prior financial history is not indicative of a company's future performance. Make sure to analyze trends over a long period of time to better understand whether fluctuations (or lack thereof) are progress towards a financial goal or inconsistent operating activity.

Real-World Example of Financial Risk

Bloomberg and other financial commentators point to the June 2018 closure of retailer Toys "R" Us as proof of the immense financial risk associated with debt-heavy buyouts and capital structures, which inherently heighten the risk for creditors and investors.

In September 2017, Toys "R'" Us announced it had voluntarily filed for Chapter 11 bankruptcy. In a statement released alongside the announcement, the company's chair and CEO said the company was working with debtholders and other creditors to restructure the $5 billion of long-term debt on its balance sheet.

As reported in an article by CNN Money , much of this financial risk reportedly stemmed from a 2005 US $6.6 billion leveraged buyout (LBO) of Toys "R" Us by mammoth investment firms Bain Capital, KKR & Co., and Vornado Realty Trust. The purchase, which took the company private, left it with $5.3 billion in debt secured by its assets and it never really recovered, saddled as it was by $400 million worth of interest payments annually.

The Morgan-led syndicate commitment didn't work. In March 2018, after a disappointing holiday season, Toys "R" Us announced that it would be liquidating all of its 735 U.S. locations to offset the strain of dwindling revenue and cash amid looming financial obligations. Reports at the time also noted that Toys "R" Us was having difficulty selling many of the properties, an example of the liquidity risk that can be associated with real estate.

In November 2018, the hedge funds and Toys "R" Us' debt holders Solus Alternative Asset Management and Angelo Gordon took control of the bankrupt company and talked about reviving the chain. In February 2019, The Associated Press reported that a new company staffed with ex-Toys "R" Us execs, Tru Kids Brands, would relaunch the brand with new stores later in the year.

In late 2019, Tru Kids Brands opened two new stores—one in Paramus, New Jersey, and the other in Houston, Texas. Most recently, Macy's has partnered with WHP Global to bring back the Toys "R" Us brand. In 2022, Macy's plans to roll out approximately 400 physical toy store storefronts within existing Macy's locations.

How Do You Identify Financial Risks?

Identifying financial risks involves considering the risk factors a company faces. This entails reviewing corporate balance sheets and statements of financial positions, understanding weaknesses within the company's operating plan, and comparing metrics to other companies within the same industry. There are several statistical analysis techniques used to identify the risk areas of a company.

How Do You Handle Financial Risk?

Financial risk can often be mitigated, although it may be difficult or unnecessarily expensive for some to completely eliminate the risk. Financial risk can be neutralized by holding the right amount of insurance, diversifying your investments, holding sufficient funds for emergencies, and maintaining different income streams.

Why Is Financial Risk Important?

Understanding, measuring, and mitigating financial risk is critical for the long-term success of an organization. Financial risk may prevent a company from successfully accomplishing its finance-related objectives like paying loans on time, carrying a healthy amount of debt, or delivering goods on time. By understanding what causes financial risk and putting measures in place to prevent it, a company will likely experience stronger operating performance and yield better returns.

Is Financial Risk Systematic or Unsystematic?

Financial risk does impact every company. However, financial risk heavily depends on the operations and capital structure of an organization. Therefore, financial risk is an example of unsystematic risk because it is specific to each individual company.

Financial risk naturally occurs across businesses, markets, governments, and individual finance. These entities trade the opportunity to make profits and yield gains for the chance that they may lose money or face detrimental circumstances. These entities can use fundamental, technical, and quantitative analysis to not only forecast risk but make plans to reduce or mitigate it.

Fitch Solutions. " 2021 U.S. High-Yield Default Rate Ends at a Record 0.5% Low ."

Bloomberg. " Lessons Learned From the Downfall of Toys "R" Us ."

Barrons. " Toys ‘R’ Us Files for Bankruptcy ."

CNN Business. " How Toys 'R' Us Went From Big Kid on the Block to Bust ."

CNN Business. " Amazon Didn't Kill Toys 'R' Us. Here's What Did ."

CNN Money. " Toys 'R' Us Will Close or Sell All US Stores ."

Associated Press. " Toys R Us Plans Second Act By Holiday Season ."

CBS News. " Toys R Us Comeback Begins with Baby Steps: 2 New Stores to Open ."

Macy's. " Macy's & Toys "R" Us ."

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• Finance Personal Statement Examples

Here are two finance personal statement examples from some of the best students in undergraduate and postgraduate programmes. Both examples you can use as inspiration and motivation to write your own personal statement for university . 

Finance Personal Statement

Ever since I discovered my passion for the finance industry at a young age, I have been determined to pursue a career as a financial consultant and advisor. It is this unwavering ambition that has led me to apply for the MSc course in Finance at the esteemed London School of Economics and Political Science (LSE). I firmly believe that this course will provide me with the necessary tools and knowledge to achieve my career goals by expanding my understanding of financial products, the intricate workings of financial markets, and investment banking.

The reputation of LSE as a university of academic excellence is one of the key reasons for my decision to apply. I am aware of the university’s ability to equip students with critical analysis skills that are essential for becoming leaders in their chosen sectors. Moreover, being located in the heart of London provides unparalleled opportunities for networking and professional development in the world of business and finance. The course’s comprehensive approach, which strikes a balance between theoretical and practical modules, is also highly appealing to me.

My educational background in accounting has laid a solid foundation for my advanced studies in finance. Through my coursework in accounting, I have developed strong numerical skills and gained practical experience in management accounting and reporting roles within financial firms. It was during my studies that I discovered a particular interest in Strategic Financial Management, where I was introduced to financial products such as equities, derivatives, fixed income, and bonds, along with their significance in financial markets. Building on this knowledge, I have become a qualified accountant and have gained valuable work experience as an Associate at Deloitte, where I am part of the project management team, responsible for decision support. This role has honed my ability to work under pressure and within tight time constraints, allowing me to meet urgent and conflicting deadlines.

To stay up-to-date with the dynamic financial market, I avidly follow financial news through subscriptions to reputable media platforms such as the Financial Times, the Economist, and Bloomberg. Additionally, I engage in various hobbies such as travelling, watching movies and documentaries, and reading to broaden my knowledge and stay informed about current affairs. As a sports enthusiast, I follow tennis, football, boxing, and Formula One racing. These diverse interests have cultivated qualities such as ambition, intuition, focus, and self-discipline, which drive me to excel in any endeavour. I value the input and opinions of others, making me an effective team player, while also possessing the independence and initiative to work autonomously. I firmly believe that these qualities will contribute to my success as a finance analyst and enable me to excel academically.

Looking toward the future, I aspire to establish a reputable financial consulting firm in my home country, Nigeria. This firm would provide a range of financial services to both companies and public institutions. I recognise that achieving this goal will require years of experience, cultivating the right connections, and personal determination. Pursuing an MSc in Finance from LSE will better equip me to manage corporate, strategic, and financial opportunities, while also providing the opportunity to learn from talented professors and compete with exceptional graduates. I am convinced that this course is a crucial step toward realizing my long-term aspirations.

The increasingly evident impact of financial risk on our world has captivated my interest like never before. The interplay between the financial sector, government, and the general public dominates news stories, emphasizing the significance of understanding the industry. With my passion for finance nurtured from an early age, I have dedicated myself to attaining a comprehensive understanding of both the theoretical and practical aspects of global finance through high-level studies and extensive work experience in diverse industrial and international contexts.

Currently, in my fourth year of a degree in Finance, Risk, and Investment at Caledonian University, I have developed a strong foundation of knowledge in the field. Moreover, I have delved deeper into specific areas

Finance Personal Statement Example

Since my early years, extensive international travel has shaped my perspective on the world, particularly the stark economic contrasts between the ‘Third World’ and the ‘Western World.’ Having the privilege of experiencing different cultures and economies through my parents, who have lived in Africa, Europe, and the USA, I have developed a deep curiosity about the mechanisms that drive global economies. This curiosity has led me to pursue Economics at A Level, as I believe it is at the core of world discussions and can provide a comprehensive understanding of current news articles and their correlation to the subject.

Through my readings, such as Tim Harford’s ‘The Undercover Economist,’ I have come to appreciate the analogy that economics is like engineering, offering insights into how things work and the consequences of changing them. I see economics as an intricate puzzle, requiring economists to integrate economic theories with government policies to solve complex economic problems. Attending conferences at prestigious institutions like the University of Warwick and Oxbridge has broadened my perspective on economics, with theories like Freakonomics intriguing me and sparking a desire to explore the unexpected links between seemingly unrelated phenomena.

My passion for economics is complemented by a strong affinity for mathematics , which has been nurtured since my childhood. From playing mental maths games to tackling complex problem-solving at A Level, I have developed analytical abilities that were put to the test during a taster day at Cass Business School. Through quick thinking and effective teamwork, I excelled in a trading shares simulation, resulting in my group being the most profitable. Furthermore, my participation in a business management enterprise day at the University of the West of England allowed me to showcase my skills, leading to the recognition of the ‘Best Business Idea.’

To gain practical experience in the finance sector, I sought work opportunities that would provide me with invaluable insights. My time at Britannia Building Society exposed me to the inner workings of retail banking, allowing me to shadow the branch manager, work closely with financial planning advisors, and handle transactions at the tills. This experience introduced me to financial assets, including options for investing in bonds, shares, and increasing savings. Additionally, working at Harrison’s Accountancy and Insolvency Agency gave me valuable knowledge about liquidations and insolvencies of businesses, further solidifying my interest in pursuing a career in finance.

Staying updated with current financial affairs is crucial to me, and I regularly read the economy sections of reputable sources such as the BBC website and The Economist. Subscribing to a weekly update from RBS provides me with topical developments in the financial markets. Alongside my commitment to academic and professional pursuits, I have also developed essential skills through my job at O2 Retail. This experience has sharpened my interpersonal skills and honed my ability to negotiate mutually beneficial deals for both customers and the company. As a captain of my football team, I have learned the value of leadership, motivation, and maintaining high team morale, skills that have translated into success in class debates and the trading shares simulation at Cass Business School.

During a recent trip to Switzerland, I had the opportunity to meet with the assistant vice president at Credit Suisse, who shared insights into exchange rate processes within a leading investment bank. These conversations further solidified my understanding of the close relationship between economics and the finance sector.

Through a comprehensive study of Level Economics and practical experiences, I have been able to bridge the gap between theory and real-world situations. Engaging with professionals in the field has deepened my appreciation for the vital connection between economics and finance. I am confident that pursuing a university education will equip me with the necessary knowledge and skills to navigate the dynamic and fast-paced world of financial markets.

My passion for finance and economics was sparked by the Lehman Brothers’ bankruptcy and the subsequent financial crisis when I was 21 years old. The events of that

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Risk Management in Personal Financial Planning: What You Need to Know

PERSONAL FINANCE  |   Jul 1, 2021 6:46:31 AM  |  by Garrett German

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While you cannot predict too many things with certainty when it comes to financial planning, you can be sure that there will always be one thing: risk.

Although it may never go away, there are steps and decisions you can make to introduce more risk management in personal financial planning to help you to mitigate and reduce the role that it plays in shaping your future.

Ready to learn how? This article will walk you through some of the key aspects of risk management, why it’s important to prioritize it, and the steps you can take to assess your risk.

What is risk management in personal financial planning?

Behind every decision you make about how, when, and where to invest your money, risk is there lurking, making even the most experienced investors second-guess their decisions or run through the numbers one more time.

However, instead of letting risk—and the fear that it can give some personal investors—scare you into not acting at all, you can learn how to control and mitigate it. That’s what risk management in personal financial planning is all about.

For some, the right risk mitigation strategy is to avoid taking the risk at all. For others, it is accepting the risks given the potential benefits. Others find a compromise, such as by starting with a small investment, balancing their investment with something not as risky, or by speaking with a financial professional about their options.

How can you assess and mitigate risk in your financial planning?

While there are several different approaches, assessing and mitigating risk generally includes:

• Identifying the potential investment risk, its cause(s), its potential to occur, and its consequences
• Determining how much of the risk you are willing to accept
• Developing strategies to mitigate the risk you choose to accept or eliminate the risk you are not

Once you move through these steps, come up with a plan, and implement it, it’s important to regularly reevaluate your decisions and calculations, especially when there is a significant change in your family, your career, or in the larger financial markets.

Why is risk management in personal financial planning important?

In other words, risk management in personal financial planning is about helping you to make the best decision, limit the amount of emotion in the decision-making process, and help you to identify how much risk you are willing to accept given the potential gains.

At the end of the process, you can replace that feeling of nervousness or doubt with:

• Knowing that you are more prepared for the unexpected
• A portfolio of investments that are better able to protect your family, assets, and plans against the unknown
• The knowledge that the potential gains and risk from your investments are balanced or are in a place that you feel comfortable with

Ready to take control of your risk?

Understanding risk management in personal financial planning can be complex and constantly changing, but, fortunately, you don’t have to face these challenges alone.

Instead, you can have the experienced team at Harvest Wealth Group partner with you and provide our tools and knowledge to help guide you and your family through the decision-making process. In the end, you can have a better understanding of your potential risk, your plans to control it, and how your decisions align with your goals and values.

If you would like to learn more about risk management in personal financial planning, our team would love to get to know you. Contact us here to schedule a free consultation and, while you are at it, we also welcome you to download our free resource, 10 Things A Smart Investor Should Consider In an Economic Downturn.

About the Author

Garrett German

Garrett German* founded Harvest Wealth Group with the aim to create a meaningful experience that will impact his clients, in a significant way, both personally and financially. After your first meeting with our team, you’ll be on your way to financial clarity and confidence.

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10 Personal Risk Management: Insurance

Introduction.

Life is full of risks. You can try to avoid them or reduce their likelihood and consequences, but you cannot eliminate them. You can, however, pay someone to share them. That is the idea behind insurance.

There are speculative risks —that is, risks that offer a chance of loss or gain, such as developing a “killer app” or business idea that may or may not sell, or investing in a corporate stock that may or may not provide good returns. Such risks can be avoided simply by not participating. They are almost always uninsurable.

There are pure risks —accidental or unintentional events, such as a car accident or an illness. Pure risks are insurable because their probabilities can be calculated precisely enough for the risk to be quantified, which means it can be priced, bought, and sold.

Risk shifting is the process of selling risk to someone who then assumes the risk and its consequences. Why would someone buy your risk? Because in a large enough market, your risk can be diversified, which minimizes its cost.

Insurance can be purchased for your property and your home, your health, your employment, and your life. In each case, you weigh the cost of the consequence of a risk that may never actually happen against the cost of insuring against it. Deciding what and how to insure is really a process of deciding what the costs of loss would be and how willing you are to pay to get rid of those risks.

Risk management is the strategic trade-off of the costs of reducing, assuming, and shifting risks. The costs of insurance can also be lowered through risk avoidance or reduction strategies. Risk avoidance is accomplished by completely avoiding the risk through such measures as choosing not to smoke or avoiding an activity that might cause injury. Risk reduction reduces the risk of injury, loss, or illness. For example, installing an alarm system in your home may reduce homeowner’s insurance premiums because that reduces the risk of theft. Of course, installing an alarm system has a cost too. Risk assumption is when one assumes responsibility for a loss or injury instead of pursuing insurance. Risk assumption is often embraced when the potential loss is minimal, risk reduction strategies have been undertaken, insurance is too expensive, and/or when protection is difficult to obtain (Kapoor et al., 2015). First Nations people on reserve can be sued and can sue for personal injury or property damage. Indigenous governments need to protect their assets and their operations from risk. There are a number of insurance companies in Canada that serve primarily First Nations clients. The following are a few examples of such companies.

Kitsaki Management Limited Corporation is owned by the Lac La Ronge Indian Band and serves nearly ten thousand band members in northern Saskatchewan. First Nations Insurance Services Limited Partnership was established in 1987 to meet the needs of First Nations, their institutions, and businesses. It provides its clients with the following choice of benefits: life insurance, dependent life coverage, accidental death and dismemberment, short- and long-term disability, extended health, dental, vision, and an employee and family assistance program, pension services, and other benefits that can be passed on to their employees. Kitsaki will “never replace or duplicate Treaty Health Rights for any employee who has Treaty Status” (Kitsaki Management Limited Corporation, 2017).

Many Nations Financial Services’ (MNFS) coordinates its clients’ group life and health insurance coverage with the benefits their clients receive from the Department of Indigenous Services Canada and Non-Insured Health Benefits (NIHB). The NIHB is a national program that provides eligible First Nations and Inuit people with prescription drugs, over-the-counter medication, medical supplies and equipment, mental health counselling, dental care, vision care, and medical transportation (Government of Canada, 2018).

MNFS also attempts to ensure that non-taxable First Nations employees receive a higher level of disability income if they become disabled in order to be comparable to their pre-disability earnings (MNFS, 2014).

AFN Insurance Brokers has been in operation since 1998 as a nationally incorporated insurance brokerage that only serves First Nations across Canada to meet their specific needs.

10.1 INSURING YOUR PROPERTY

Learning objectives.

• Describe the purpose of property insurance.
• Identify the causes of property damage.
• Compare the coverage and benefits offered by various homeowner’s insurance plans.
• Analyze the costs of homeowner’s insurance.
• Compare the kinds of auto insurance to cover bodily injury and property damage.
• Explain the factors that determine auto insurance costs.
• Analyze the factors used in determining the risks of the driver, the car, and the driving region.

Property insurance is ownership insurance: it ensures that the rights of ownership conferred upon you when you purchased your property will remain intact. Typically, property insurance covers loss of use from either damage or theft; loss of value, or the cost of replacement; and liability for any use of the property that causes damage to others or others’ property. For most people, insurable property risks are covered by insuring two kinds of property: car and home.

Loss of use and value can occur from hazards , which increase the likelihood of loss due to peril, which is the cause of possible loss. Examples of perils are fires, weather disasters, accidents, and the results of deliberate destruction such as vandalism or theft. One can choose named perils coverage, which provides coverage only for loss caused by the perils one chooses. All risks coverage applies to loss from all causes and is usually more expensive than a named perils insurance policy.

When replacement or repair is needed to restore usefulness and value, that cost is the cost of your risk. For example, if your laptop’s hard drive crashes, you not only have the cost of replacing or repairing it, but also the cost of being without your laptop for however long that takes. Insuring your laptop shares that risk (and those costs) with the insurer.

Liability is the risk that your use of your property will injure someone or something else. Ownership implies control of, and therefore responsibility for, property use.

For example, you are liable for your dog’s attack on a pedestrian and for your fallen tree’s damage to a neighbour’s fence. You are also liable for damage a friend causes while driving your car with your permission, and for injury to your invited guests who trip over your lawn ornament, fall off your deck, or leave your party drunk.

Legal responsibility can result from:

• negligence , or the failure to take necessary precautions;
• strict  liability , or responsibility for intentional or unintentional events (strict liability is when you are liable by default—that is, the onus has shifted from the plaintiff to the defendant. For example, if you have a dangerous thing, like a wild animal, and it escapes, it is presumed to be your fault unless you can demonstrate some intervening cause that was not caused by your negligence); and
• vicarious  liability , or responsibility for someone else’s use of your possessions or someone else’s activity for which you are responsible.

Home Insurance Coverage

Homeowner’s insurance insures both the structure and the personal possessions that make the house your home. Tenant’s or renter’s insurance protects your possessions even if you are not the owner of your dwelling. Tenant’s insurance policies will vary depending on the customer. Riders are exemptions included in policies that allow you to adapt your renter’s policy to fit your needs. For example, if you work from home, you might consider an at-home business endorsement rider, which provides additional coverage for certain business-related items such as a computer and other electronic items that can surpass your $2,500 liability limit on business items. This rider could help to double your standard coverage at a low cost.

A deductible —a fixed sum of money—is required before an insurance company will pay a claim. As stated in Kapoor et al., “the amount of your deductible is often $100, $250, $500, or $1,000, and your insurance company will subtract that amount from your claim” (2015, p. 243). Thus, if you have to pay a $500 deductible for a $1,000 claim, then you will only receive $500 for the claim. Policy premiums are often reduced when one agrees to pay a higher deductible. A policy costs less when you agree to pay a higher deductible because you are essentially sharing more of the risk with the insurance company. Higher deductibles also have other advantages for insurance companies. When people have to pay a higher deductible, they are more careful and, therefore, insurance companies have to process fewer claims (Kapoor et al., 2015).

You may not think you need insurance until you are the homeowner, but even when you don’t need to insure against possible damage or liability for your dwelling, you can still insure your possessions. Even if your furniture came from your aunt’s house or a yard sale, it could cost a lot to replace. Ed and Elizabeth were renting and had chosen to store artwork and a number of heirlooms in the basement of their home rental. Their landlord was negligent and had not cleaned the septic tank in years. The septic tank backed up in the basement of their home rental and most of their artwork and heirlooms were ruined. Luckily, they had tenant’s insurance that covered the replacement cost of most of their items.

If you have especially valuable possessions such as jewelry or fine musical instruments, you may want to insure them separately to get enough coverage for them. Such items are typically referred to as scheduled property and are insured as endorsements added on to a homeowner’s or renter’s policy. Items should be appraised by a certified appraiser to determine their replacement or insured value.

A good precaution is to have an up-to-date inventory of your possessions such as furniture, clothing, electronics, and appliances, along with photographs or video showing these items in your home. That inventory should be kept somewhere else, such as a safe deposit box. If the house suffered damage, you would then have the inventory to help you document your losses.

A homeowner’s policy covers damage to the structure itself as well as any outbuildings on the property and, in some cases, even the landscaping or infrastructure on the grounds, such as a driveway.

A homeowner’s policy does not cover:

• property of renters, or property kept in an apartment regularly rented;
• business property, even if the business is conducted on the residential premises; and
• most forms of accidental death (e.g., vehicle impact).

According to the Insurance Bureau of Canada, coverage can vary from one insurer to the next. Different policies exist to meet the different needs of insurers.

Home insurance covers the dwelling, contents, and personal liability of the policyholder, as well as his or her spouse or partner and children. The policy also covers:

• dependants under the age of eighteen; and
• dependants who are students enrolled and actually attending a school, college, or university and living in the household or temporarily living away from the insured principal residence.

If you share your home with a friend or relative, or rent out part of your residence, you must notify your insurance representative.

Home insurance also includes coverage for additional living expenses in the event that you are temporarily unable to live in your home due to an insured loss in certain circumstances.

Homeowners’ policies cover liability for injuries on the property and for injuries that the homeowner may accidentally inflict. You may also want to add an umbrella policy that covers personal liabilities such as slander, libel, and defamation of character, or the invasion of property. An umbrella policy may also extend over other assets, such as vehicles or rentals covered by other insurance carriers. If you participate in activities where you are assuming responsibilities for others, you may want such extended liability coverage available through your homeowners’ policy (also available separately).

Home Insurance Coverage: The Benefit

Home insurance policies automatically cover your possessions up to a certain percentage of the house’s insured value. You can buy more coverage if you think your possessions are worth more. The benefits are specified as either actual cash value or replacement cost . Actual cash value tries to estimate the actual market value of the item at the time of loss, so it accounts for the original cost less any depreciation that has occurred. Replacement cost is the cost of replacing the item. For most items, the actual cash value is less.

For example, say your policy insures items at actual cash value. You are claiming the loss of a ten-year-old washer and dryer that were ruined when a pipe burst and your basement flooded. Your coverage could mean a benefit of $100 (based on the market price of ten-year-old appliances). However, to replace your appliances with comparable new ones could cost $1,000 or more.

The actual cash value is almost always less than the replacement value, because prices generally rise over time and because items generally depreciate (rather than appreciate) in value. A policy that specifies benefits as replacement costs offers more actual coverage. Guaranteed replacement costs are the full cost of replacing your items, while extended replacement costs are capped at a certain percentage—for example, 125 per cent of actual cash value.

Home Insurance Coverage: The Cost

You buy home insurance by paying a premium to the insurance company. The insurance purchase is arranged through a broker, who may represent more than one insurance company. The broker should be knowledgeable about various policies, coverage, and premiums offered by different insurers.

The amount of the premium is determined by the insurer’s risk—the more risk, the higher the premium. Risk is determined by:

• the insured (the person buying the policy),
• the property insured, and
• the amount of coverage.

To gauge the risk of the insured, the insurer needs information about your personal circumstances and history, the nature of the property, and the amount of coverage desired for protection. This information is summarized in Table 10.1.1.

Insurers may offer discounts for enhancements that lower risks, such as alarm systems or upgraded electrical systems. You may also be offered a discount for being a loyal customer, for example, by insuring both your car and home with the same company. Be sure to ask your insurance broker about available discounts for the following:

• Multiple policies (with the same insurer),
• Sprinkler systems,
• Burglar and fire alarms,
• Long-time policyholder,
• Upgrades to plumbing, heating, and electrical systems,
• Age (insurers give discounts to people as young as age forty in some cases), and
• Credit scoring (quite new in Canada).

Premiums can vary, even for the same levels of coverage for the same items insured. You should compare policies offered by different insurers to shop around for the best premium for the coverage you want.

Insuring Your Car

If you own and drive a car, you must have car insurance. A car accident could affect not only you and your car, but also the health and property of others. An accident often involves a second party, and so legal and financial responsibility must be assigned and covered by both parties.

Conventionally, a victim or plaintiff in an accident is reimbursed by the driver at fault or by his or her insurer. Fault has to be established and the amount of the claim agreed to. In practice, this has often been done only through extensive litigation.

In Canada, the provincial governments of British Columbia, Manitoba, and Saskatchewan offer basic automobile insurance coverage. In Quebec, the provincial government and private insurers split auto insurance coverage. In all other provinces and territories, private insurers provide auto insurance. Public insurance requires just one price for coverage, while private insurance companies’ rates may vary. Manitoba, Ontario, Quebec, and Saskatchewan have adopted variations of no-fault insurance , in which an injured person’s own insurance covers his or her damages and injuries regardless of fault, and a victim’s ability to sue the driver at fault is limited. The person deemed responsible for the accident is responsible for the deductible payment. The goal of no-fault insurance is to lower the incidence of court cases, and thus the cost of legal action against a third party, and to speed up compensation for victims (Kapoor et al., 2015).

Auto Insurance Coverage

Auto insurance policies cover two types of consequences: bodily injury and property damage. Each cover three types of financial losses. Chart 10.1.1 shows these different kinds of automobile insurance coverage.

Chart 10.1.1 Automobile Insurance Coverage

Bodily injury liability refers to the financial losses of people in the other car that are injured in an accident you cause, including their medical expenses, loss of income, your legal fees, and other expenses associated with the automobile accident. Injuries to people in your car or to yourself are covered by the automobile owner’s policy. If the owner has given permission for someone else to operate his or her vehicle, the automobile owner’s policy will cover any liability claim. Accident Benefits cover the following benefits for people, including yourself, who were injured in your automobile accident: income replacement, medical, rehabilitation, and attendant car expenses, and death and funeral costs (Kapoor et al., 2015).

Uninsured motorist protection covers your injuries if the accident is caused by someone with insufficient insurance or by an unidentified driver.

Property damage liability covers the costs to other people’s property from damage that you cause, while collision covers the costs of damage to your own property. Collision coverage is limited to the market value of the car at the time. To reduce their risk, the lenders financing your car loan will require that you carry adequate collision coverage. Comprehensive physical damage covers your losses from anything other than a collision, such as theft, weather damage, acts of nature, or hitting an animal.

Auto Insurance Costs

As with any insurance, the cost of having an insurer assume risk is related to the cost of that risk. The cost of auto insurance is related to three factors that create risk: the car, the driver, and the driving environment—the region or rating territory.

The model, style, and age of the car determine how costly it may be to repair or replace, and therefore the potential cost of damage or collision. The higher that cost is, the higher the cost of insuring the car. For example, a 2017 luxury car will cost more to insure than a 2002 sedan. Also, different models have different safety features that may lower the potential cost of injury to passengers, and those features may lower the cost of insurance. Different models may come with different security devices or be more or less attractive to thieves, affecting the risk of theft.

The driver is an obvious source of risk as the operator of the car. Insurers use various demographic factors such as age, education level, marital status, gender, and driving habits to determine which kinds of drivers present more risk. Not surprisingly, young drivers (ages sixteen to twenty-four) of both sexes and elderly drivers (over seventy) are the riskiest. According to data compiled over a ten-year period, provincial police have said that twice as many males as females aged twenty-five to thirty-four die in auto accidents (Canadian Press, 2015).

Your driving history, and especially your accident claim history, along with your criminal record (or lack thereof) and credit score, can affect your premiums. In some provinces and territories, an accident claim can severely increase your cost of insurance over a number of years. Your driving habits—whether or not you use the car to commute to work, for example—can affect your costs as well. Some insurers offer credits or points that reduce your premium if you have a safe driving record or have passed a driver education course.

Where you live and drive also matters. Insurers use police statistics to determine rates of traffic accidents, auto theft, and vandalism, for example. If you are in an accident-prone area or higher-crime region, you may be able to offset those costs by installing safety and security features in your car.

Premium rates vary, so you should always shop around. You can shop through a broker or directly. Online discount auto insurers have become increasingly popular in recent years. Their rates may be lower, but the same cautions apply as for other high-stakes transactions conducted online.

Also, premiums are not the only cost of auto insurance. You should also consider the insurer’s reliability in addressing a claim. Chances are you rely on your car to get to school, to work, or for your daily errands or recreational activities. Your car is also a substantial investment, and you may still be paying off debt from financing your car. Losing your car to repairs and perhaps being injured yourself is no small inconvenience and can seriously disrupt your life. You want to be working with an insurer who will co-operate in trying to get you and your car back on the road as soon as possible.

Key Takeaways

• Property insurance is to insure the rights of ownership and to protect against its liabilities.
• Property damage can be caused by hazards or by deliberate destruction, such as vandalism or theft.
• Homeowner’s policies insure structures and possessions for actual cash value or replacement cost; an umbrella policy covers personal liability.
• The cost of homeowner’s insurance is determined by the individual taking out the policy, the property insured, and the extent of the coverage and benefits.
• Auto insurance coverage insures bodily injury through: • bodily injury liability, • medical payments coverage, and • uninsured motorist protection.
• Auto insurance coverage insures property damage through: • property damage liability, • collision, and • comprehensive physical damage.
• Auto insurance costs are determined by the driver, the car, and the driving region.
• The risk of the driver is determined by demographics, credit history, employment history, and driving record.
• The risk of the car is determined by its cost; safety and security features may lower insurance costs.
• The risk of the driving region is determined by statistical incident histories of accidents or thefts.
• In your personal finance journal, record or chart all the insurances you own privately or through a financial institution and/or are entitled to through your employer. In each case, consider the following questions: what is insured, who is the insurer, what is the term, what are the benefits, and what is your premium or deduction? Research online to find the details. Then analyze your insurance in relation to your financial situation. How does each type of insurance shift or reduce your risk or otherwise help protect you and your assets or wealth?
• Conduct and record a complete inventory of all your personal property. State the current market value or replacement cost of each item. Then identify the specific items that would cause you the greatest difficulty and expense if they were lost, damaged, or stolen.
• How would a tenant’s insurance policy help protect your property? What do such policies cover? How much would it cost you to insure against the loss of just your laptop or desktop computer?
• How do auto insurance rates in your province or territory—which are based partly on the rates of accidents, injuries, and deaths in your respective province or territory—compare with rates in other provinces?

Canadian Press. (2015). “OPP data shows twice as many men have died in crashes as women.” CBC News , Mar. 23. Retrieved from: http://www.cbc.ca/news/canada/kitchener-waterloo/opp-data-shows-twice-as-many-men-have-died-in-crashes-as-women-1.3005464 .

Government of Canada. (2018). Benefits Information – Non-Insured Health Benefits. Retrieved from: https://www.canada.ca/en/indigenous-services-canada/services/first-nations-inuit-health/non-insured-health-benefits/benefits-information.html.

Kapoor, J., L. Dlabay, R. Hughes, and F. Ahmad. (2015). Personal Finance . Toronto: McGraw-Hill Ryerson.

Kitsaki Management Limited Corporation. (2017). “First Nations Insurance Services Limited Partnership.” Retrieved from: http://www.kitsaki.com/fninsurance.html .

Many Nations Financial Services. (2014). Group Health and Life Insurance. Retrieved from: http://manynations.com/group-life-insurance/.

10.2 INSURING YOUR HEALTH AND INCOME

• Discuss how health insurance is important when it comes to financial planning.
• Describe the purposes, coverage, and costs of disability insurance.
• Compare the appropriate uses of term life and whole life insurance.
• Explain the differences among variable, adjustable, and universal whole life policies and the use of riders.
• List the factors that determine the premiums for whole life policies.

As you have learned, assets such as a home or car should be protected from the risk of a loss of value, because assets store wealth, so a loss of value is a loss of wealth.

Your health is also valuable, and the costs of repairing it in the case of accident or illness are significant enough that it also requires insurance coverage. In addition, however, you may have an accident or illness that leaves you permanently impaired or even dead. In either case, your ability to earn income will be restricted or gone. Thus, your income should be insured, especially if you have dependents who would bear the consequences of losing your income. Disability insurance and life insurance are ways of insuring your income against some limitations.

Health Insurance

In Canada, provincial government health plans cover most basic medical procedures under the Medical Care Act. The following are examples of items either not covered or only partially covered by provincial health insurance plans:

• Semi-private or private hospital rooms
• Prescription drugs
• Dental care
• Private nursing care
• Cosmetic surgery
• Physician testimony in court

Many people insure the above-mentioned items through private medical insurance companies. When travelling internationally, many people will also purchase travel insurance to cover health-care costs that are not fully covered by provincial health-care plans.

Health insurance pays for medical expenses incurred by the insured and reduces the financial burden of risk by “dividing losses among many individuals” (Kapoor et al., 2015, p. 274). Insurance companies establish rates and benefits by determining how many people within a certain population will become ill and how much their illness will cost (Kapoor et al., 2015). Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly.

Group health insurance plans most commonly offer supplemental health insurance coverage and are most often sponsored by the employer, who pays most or part of the cost. Group health insurance plans vary depending on the provider and will likely not cover all of one’s health needs. Therefore, many will supplement their group insurance plans with individual health insurance.

Individual health insurance plans are tailored to an individual’s or family’s specific needs, particularly when group insurance plans do not suffice. Individual health insurance plans do require comparative shopping because coverage and cost can vary greatly from one provider to the next. “Make sure you have enough insurance, but don’t waste money by over insuring” (Kapoor et al., 2015).

Disability Insurance

Disability insurance is designed to insure your income should you survive an injury or illness impaired. The definition of “disability” is a variable feature of most policies. Some define it as being unable to pursue your regular work, while others define it more narrowly as being unable to pursue any work. Some plans pay partial benefits if you return to work part-time, and some do not. As always, you should understand the limits of your plan’s coverage.

The costs of disability insurance are determined by the features and/or conditions of the plan, including the following:

• Waiting period
• Amount of benefits
• Duration of benefits
• Cause of disability
• Payments for loss of vision, hearing, speech, or use of limbs
• Inflation-adjusted benefits
• Guaranteed renewal or non-cancelable clause

In general, the more of these features or conditions that apply, the higher your premium.

All plans have a waiting period from the time of disability to the collection of benefits. Most are between 30 and 90 days, but some are as long as 180 days. Generally, the longer the waiting period is, the less the premium.

Plans also vary in the amount and duration of benefits. Benefits are usually offered as a percentage of your current wages or salary. The more the benefits or the longer the insurance pays out, the higher the premium.

In addition, some plans offer benefits in the following cases, all of which carry higher premiums:

• Disability due to accident or illness
• Loss of vision, hearing, speech, or the use of limbs, regardless of disability
• Benefits that automatically increase with the rate of inflation
• Guaranteed renewal, which insures against losing your coverage if your health deteriorates

You may already have some disability insurance through your employer, although in many cases the coverage is minimal. Private medical insurance policies provide coverage for disability. Coverage varies depending on your premium, the company, and the details of your policy. There are provincial and federal programs available to the disabled. Employment insurance is a federal program that provides short-term payments for those who have contributed in the past. Both the Canada and Quebec Pension Plans also include a disability pension for those contributors with a severe or prolonged disability. You may also be eligible for workers’ compensation benefits from your province or territory, if the disability is due to an on-the-job accident (Kapoor et al., 2015). Other providers of disability benefits include the following:

• Veterans’ Affairs Canada (if you are a veteran)
• Automobile insurance (if the disability is due to a car accident)
• Labour unions (if you are a member)
• Civil service provisions (if you are a government employee)

You should know the coverage available to you and if you find it’s not adequate, supplement it with private disability insurance.

Life Insurance

Life insurance is a way of insuring that your income will continue after your death. If you have a spouse, children, parents, or siblings who are dependent on your income or care, your death would create new financial burdens for them. To avoid that, you can insure your dependents against your loss, at least financially.

There are many kinds of life insurance policies. Before purchasing one, you should determine what it is you want the insurance to accomplish for your survivors. This could include the following:

• Pay off the mortgage
• Put your kids through university
• Provide income so that your spouse can be home with the kids and not be forced out into the workplace
• Provide alternative care for your elderly parents or dependent siblings
• Cover the costs of your medical expenses and funeral

Your goals for your life insurance will determine how much benefit you need and what kind of policy you need. Weighed against that are its costs—the amount of premium that you pay and how that fits into your current budget. Consider the following scenario.

Sam and Saifina have two children, ages three and five. Saifina works as a credit analyst in a bank. Sam looks after the household and the children and Saifina’s elderly mother, who lives a couple of blocks away. He does her grocery shopping, cleans her apartment, does her laundry, and runs any errands that she may need done. Sam and Saifina live in a condo they bought, financed with a mortgage. They have established RESPs for each child, and they try to save regularly.

Sam and Saifina need to insure both their lives, because the loss of either would cause the survivors financial hardship. With Saifina’s death, her earnings would be gone, which is how they pay the mortgage and save for their children’s education. Insurance on her life should be enough to pay off the mortgage and fund their children’s university educations, while providing for the family’s living expenses, unless Sam returns to the workforce. With Sam’s death, Saifina would have to hire someone to keep house and care for their children, and also someone to keep her mother’s house and provide care for her. Insurance on Sam’s life should be enough to maintain everyone’s quality of living.

Term Insurance

Saifina’s income provides for three expenditures: the mortgage, education savings, and living expenses. While living expenses are an ongoing or permanent need, the mortgage payment and the education savings are not: eventually, the mortgage will be paid off and the children educated. To cover permanent needs, Saifina and Sam could consider permanent insurance, also known as whole life , straight life, or cash value insurance. To insure those two temporary goals of paying the mortgage and university tuitions, Saifina and Sam could also consider temporary or term insurance. Term insurance is insurance for a limited time period, usually one, five, ten, or twenty years. After that period, the coverage stops. It is used to cover financial needs for a limited time period—for example, to cover the balance due on a mortgage, or education costs. Premiums are lower for term insurance, because the coverage is limited. The premium is based on the amount of coverage and the length of the time period covered.

A term insurance policy may have a renewability option, so that you can renew the policy at the end of its term, or it may have a conversion option, so that you can convert it to a whole life policy and pay a higher premium. If it is a multi-year level term or straight term, the premium will remain the same over the term of coverage.

Decreasing term insurance pays a decreasing benefit as the term progresses, which may make sense in covering the balance due on a mortgage, which also decreases with payments over time. On the other hand, you could simply buy a one-year term policy with a smaller benefit each year and have more flexibility should you decide to make a change.

A return-of-premium (ROP) term policy will return the premiums you have paid if you outlive the term of the policy. On the other hand, the premiums on such policies are higher, and you may do better by simply buying the regular term policy and saving the difference between the premiums.

Term insurance is a more affordable way to insure against a specific risk for a specific time. It is pure insurance, in that it provides risk shifting for a period of time, but unlike whole life, it does not also provide a way to save or invest.

Whole Life Insurance

Whole life insurance is permanent insurance—that is, you pay a specified premium until you die, at which time your specified benefit is paid to your beneficiary. The amount of the premium is determined by the amount of your benefit and your age and life expectancy when the policy is purchased.

Unlike term insurance, where your premiums simply pay for your coverage or risk shifting, a whole life insurance policy has a cash surrender value or cash value that is the value you would receive if you cancelled the policy before you die. You can “cash out” the policy and receive that cash value before you die. In that way, the whole life policy is also an investment vehicle: your premiums are a way of saving and investing, using the insurance company as your investment manager. Whole life premiums are more than term life premiums because you are paying not only to shift risk, but also for investment management.

A variable life insurance policy has a minimum death benefit guaranteed, but the actual death benefit can be higher depending on the investment returns that the policy has earned. In that case, you are shifting some risk, but also assuming some risk of the investment performance.

An adjustable life policy is one where you can adjust the amount of your benefit, and your premium, as your needs change.

A universal life policy offers flexible premiums and benefits. The benefit can be increased or decreased without cancelling the policy and getting a new one (and thus losing the cash value, as in a basic whole life policy). Premiums are added to the policy’s cash value, as are investment returns, while the insurer deducts the cost of insurance (COI) and any other policy fees.

When purchased, universal life policies may be offered with a single premium payment, a fixed (and regular) premium payment until you die, or a flexible premium where you can determine the amount of each premium, so long as the cash value in the account can cover the insurer’s COI. Chart 10.2.1 shows the life insurance options.

Chart 10.2.1 Life Insurance Options

So, is it term or whole life? When you purchase a term life policy, you purchase and pay for the insurance only. When you purchase a whole life policy, you purchase insurance plus investment management. You pay more for that additional service, so its value should be greater than its cost (in additional premiums). Whole life policies take some analysis to assess the real investment returns and fees, and the insurer is valuable to you only if it is a better investment manager than you could have otherwise. There are many choices for investment management. Thus, the additional cost of a whole life policy must be weighed against your choices among investment vehicles. If it’s better than your other choices, then you should buy the whole life. If not, then buy term life and save or invest the difference in the premiums.

Choosing a Policy

All life insurance policies have basic features, which then can be customized with a rider clause that adds specific benefits under specific conditions. The standard features include provisions that protect the insured and beneficiaries in cases of missed premium payments, fraud, or suicide. There are also loan provisions granted, so that you can borrow against the cash value of a whole life policy.

Riders are actually extra insurance that you can purchase to cover less-common circumstances. Commonly offered riders include:

• a waiver of premium payment if the insured becomes completely disabled;
• a double benefit for accidental death;
• guaranteed insurability allowing you to increase your benefit without proof of good health;
• cost of living protection that protects your benefit from inflation; and
• accelerated benefits that allow you to spend your benefit before your death if you need to finance long-term care.

Finally, you need to consider the settlement options offered by the policy: the ways that the benefit is paid out to your beneficiaries. The three common options are:

• as a lump sum, paid out all at once;
• in installments, paid out over a specified period; or
• as interest payments, so that a series of interest payments is made to the beneficiaries until a specified time when the benefit itself is paid out.

You would choose the various options depending on your beneficiaries and their anticipated needs. Understanding these features, riders, and options can help you to identify the appropriate insurance product for your situation. As with any purchase, once you have identified the product, you need to identify the market and the financing.

Many insurers offer many insurance products, usually sold through brokers or agents. Agents are paid on commission, based on the amount of insurance they sell. A captive agent sells the insurance of only one company, while an independent agent sells policies from many insurers. You want a licensed agent that is responsive and will answer questions patiently and professionally. If you die, this may be the person on whom your survivors will have to depend to help them receive their benefits in a troubling time.

You will have to submit an application for a policy and may be required to have a physical exam or release medical records to verify your physical condition. Factors that influence your riskiness are your family medical history, age and weight, and lifestyle choices such as smoking, drinking, and drug use. Your risks will influence the amount of your premiums.

Having analyzed the product and the market, you need to be sure that the premium payments are sustainable for you, that you can add the expense in your operating budget without creating a budget deficit.

Life Insurance as a Financial Planning Decision

Unlike insuring property and health, life insurance can combine two financial planning functions: shifting risk and saving to build wealth. The decision to buy life insurance involves thinking about your choices for both and your opportunity cost in doing so.

Life insurance is about insuring your earnings even after your death. You can create earnings during your lifetime by selling labour or capital. Your death precludes your selling labour or earning income from salary or wages, but if you have assets that can also earn income, they may be able to generate some or even enough income to ensure the continued comfort of your dependents, even without your salary or wages.

In other words, the larger your accumulated asset base, the greater its earnings, and the less dependent you are on your own labour for financial support. In that case, you will need less income protection and less life insurance. Besides life insurance, another way to protect your beneficiaries is to accumulate a large enough asset base with a large enough earning potential.

If you can afford the life insurance premiums, then the money that you will pay in premiums is currently part of your budget surplus and is being saved somehow. If it is currently contributing to your children’s education savings or to your retirement plan, you will have to weigh the value of protecting current income against insuring your children’s education or your future income in retirement. Or that surplus could be used toward generating that larger asset base.

These are tough decisions to weigh because life is risky. If you never have an accident or illness, and simply go through life earning plenty and paying off your mortgage and saving for retirement and educating your children, then are all those insurance premiums just wasted? No. Since your financial strategy includes accumulating assets and earning income to satisfy your needs now or in the future, you need to protect those assets and income, at least by shifting the risk of losing them through a chance accident. At the same time, you must make risk-shifting decisions in the context of your other financial goals and decisions.

• Disability insurance insures your income against an accident or illness that leaves your earning ability impaired.
• Disability insurance coverage and costs vary.
• Life insurance is designed to protect dependents against the loss of your income in the event of your death.
• Term insurance provides life insurance coverage for a specified period of time.
• Whole life insurance provides life insurance coverage until the insured’s death.
• Whole life insurance has a cash surrender value and thus can be used as an investment instrument as well as a way of shifting risk.
• Variable, adjustable, and universal life policies offer more flexibility of benefits and premiums.
• Riders provide more specific coverage.
• Premiums are determined by the choice of benefits and riders and the risk of the insured, as assessed by medical history and lifestyle choices.
• Find out about workers’ compensation in your province or territory by visiting the website of the  Association of Workers’ Compensation Boards of Canada . What does the Association of Workers’ Compensation Boards of Canada do? Find out what programs are available in your province for workers’ compensation covering industrial and workplace accidents. What information does the Canadian Centre for Occupational Health and Safety provide on the prevention of workplace illness and injury?
• Find information about employment insurance at the following websites Employment and Social Development Canada and EI Regular Benefits—Overview to answer the following questions: •  What does it mean to be involuntarily unemployed? •  If you are involuntarily unemployed, does employment insurance replace your wages? •  Are you entitled to employment insurance if you choose to be unemployed temporarily? •  Does it matter what kind of a job you have or how much income you earn? •  Where does the money come from? •  If you have seasonal employment, can you collect unemployment to cover the off-season? •  If you are eligible, how long can you collect unemployment? •  Is the money you receive from unemployment compensation taxable?

Financial Empowerment: Personal Finance for Indigenous and Non-Indigenous People Copyright © 2018 by Bettina Schneider and Saylor Academy is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Understanding Personal Financial Risk Management

Risk is inherent in all aspects of our daily lives, yet is an often overlooked piece of the financial puzzle.

Table of Contents

Oftentimes, you’ll hear financial risk management strategies applied to business operations and investments, this is because risk management is so important to the survival and success of businesses and investment portfolio; its importance, however, is rarely emphasized to individual personal financial planning, and while business and investment growth are important, personal financial conservation and success equally is, and that is the focus of this article.

Understanding Risks

Types of risk, loss of asset in personal finance, what is financial risk management, risk assumption (assume risk), risk avoidance (avoid risk), risk sharing (share risk), risk transfer, the worst financial risk management strategy & what you should do instead, job loss (and/or business setback), get organized, separate joint accounts, establish and monitor your credit, revise your will and power of attorney, update your insurance and investments, talk to your professionals, serious illness, premature death, the cost of risks, the objective of risk management, importance of financial risk management.

Risk is the possibility of loss , in most cases, of an asset that could potentially cause financial hardships to an entity, individual, or family.

As an economic being, you may own a lot of assets, some are important, some aren’t as important.

There are a lot of different risks that may affect ones’ financial well-being, due to loss of one or more assets.

Driving to and from work on a daily basis, for example, presents a lot of risks to you, your loved ones and your vehicle.

In Canada, you can’t drive a vehicle without insuring it and you have to go through a stringent driver-licensing certification before you could operate one as a licensed-driver.

That’s because taking a vehicle on the road presents such a high-risk to yourself and others.

Should something happen on the road, a lot of assets and lives are at risk. To protect yourself against the financial obligations of such a risk, proper driver certification and the implementation of auto insurance is the most sensible thing to do.

By implementing auto insurance, you’re sharing the risk to another entity, which in this case is an insurance company, so you won’t have to assume all the financial risk of such a loss that may result due to an accident or vandalism.

Yesterday, for example, I went to AUTOPAC (Manitoba owned auto insurance provider) for an estimate because my SUV’s rear glass panel was vandalized (i.e. shattered to pieces) just a couple of nights ago; the total cost to replace the glass and repair a small dent near the hatch came to about $1,700.00. If I didn’t have insurance on my vehicle, I would have assumed this loss, since I have insurance in place, I “shared” or “transfer” the risk to another entity, which in this case is the insurance company.

I used a car as an example because every law-abiding Canadians, insure their car, one because of the high perceived value, secondly, because it’s required by law. Inside the car though, there’s a more valuable asset, no it’s not your purse or smartphone… it’s you and your loved ones!

Unfortunately, very few Canadians, actually think of implementing an effective risk management strategies to the most valuable assets inside their vehicles or their homes. Most of us would insure every other assets or possessions that we have, instead of ourselves.

Effectively managing your personal financial risks sets out the foundation of your financial security and future; so whether you’re a self-employed professional, a business owner, or an employee, implementing an effective personal risk management strategy is very important in protecting your bottom line.

There are various types of risk management strategies available in personal finance, by default, most people assume the financial impact of certain risks, unaware of the fact that they can actually mitigate or minimize the financial impact of such risks by sharing or transferring the risk to someone else.

The purpose of managing your personal financial risks is to protect your financial well-being, assets, goals, dreams and loved ones from the “what-ifs” of life so you or your loved ones’ won’t have to find yourselves in a “what now” situation when the “what if” may have already happened.

When the risk is low and isn’t too costly, it’s easy to assume it. When the risk is high and too costly, it’s stupid to assume it.

You need other ways to manage such a risk, sharing or transferring the risk to someone else may be a convenient option.

Insurance provides an effective way of mitigating the financial impact of a catastrophic event.

Generally, there are two types of risks, namely, “ pure risk ” and “ speculative risk “.

Pure Risk , is a type of risk wherein you can only incur loss in case a certain event occurs.

For example, flood damage.

In case a flood occurs in your area, your house will either be damaged or not. This type of risk is usually insurable.

Speculative Risk is a type of risk wherein certain events may result to a gain, loss, or even (stays the same).

This type of risk correlates to investments, business, and gambling wherein a person takes a certain level of risk with the aim of achieving speculative growth. This type of risk is generally uninsurable but there are ways to hedge against this risk to mitigate or minimize your losses.

If risk is defined as the possibility of loss, what asset can a person potentially lose which could result to financial hardship?

As an economic being, you may own a lot of assets, some are important, some aren’t as important, so it’s a matter of prioritizing, which among your assets are the most important that losing such may result to financial hardship.

An asset, as defined in dictionary, is a:

“property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.”

In other words, an asset is anything that you own or possess that puts money in your pocket.

If you’re an employee, your job, (love it, or hate it), is an asset. If you’re self-employed or a business owner, your business or career is an asset.

Some people think that material possessions like the house they live in, cars, electronics, and furniture are their most important assets, and agreeably, losing these assets can result in some sort of financial losses.

If a Smart TV, say for example that costs $5,000.00, breaks down after 1-year, and you haven’t implemented extended warranty insurance, this will result to a financial loss, since having it repaired or replaced will cost you money but this is not the kind of asset that we’re talking about here, most people do hedge against losing these asset type but fail to hedge against losing their most important asset.

So what is your most important asset?

If you’re like most of us and you actively work for income either on a business, profession or a job, your most important asset is your ability to work for income ; the potential risk of losing this ability may result to drastic financial losses or hardships to you and those who depend on you for financial support.

Most people don’t realize the amount of financial risk associated with the possibility of losing their ability to work for a living, so by default, they tend to assume the financial impact which may result to losing such.

Think about this for a moment, if you suddenly find yourself in a situation where you’re unable to actively work for income, and you don’t have an effective risk management strategy in place, what would you do?

Will you and your loved ones be able to afford the same lifestyle?

Will you and your loved ones not struggle financially?

Will your wealth-accumulation plans remain intact and unaffected?

If you answered, “Yes” to these, then you are already effectively managing your risks, if not, continue reading!

In business, financial risk management is defined as:

“The forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.”

In personal finance, financial risk management is the process of applying risk management principles to the needs of individual consumers. It is the process of identification and analysis of personal risk and the acceptance or mitigation of the financial impact thereof.

Financial risk management in personal finance is technically applying risk management principles to individual personal finance.

Four Types of Financial Risk Management Strategies

There are generally four types of financial risk management strategies most people use in personal finance and unknowingly, you’re using one of them in most cases.

• Risk Assumption
• Risk Avoidance
• Risk Sharing

As mentioned, most people tend to assume their financial risks, simply because they’re not aware of the fact that there are far better way to protect themselves and loved ones’ against serious life events that may affect their financial well-being.

By default, most people assume life’s financial risks on a daily basis, specifically, when it comes to the possibility of loss of or reduced in income.

Another way you can manage risk is by avoiding it.

Say, if you just bought a Tesla Model X, considering the amount of money you would have invested in acquiring this robust kind of a vehicle, you wouldn’t want to risk losing it.

To protect yourself from such a loss, you can avoid driving it completely, park it inside your garage, and just take the bus but then if you come to think of it; that’s going to be counter-productive since the main purpose of acquiring a vehicle is to use it to get from point A to point B, faster then when you’re taking public transport.

Taking the same example we’ve used in the “risk avoidance” risk management strategy, we’ll use your Tesla Model X in the risk sharing strategy. So, instead of parking your car, you decide that it’s going to serve you best if you actually use it, but then, using it in the freeway on a daily basis comes with a high level of risk of actually damaging or losing your vehicle; in this case, you decide that you’re going to share your risk, instead of assuming it on your own or avoiding the risk.

You decide that maybe, it’s a good idea to simply purchase an auto insurance; this way, you can have your cake, and eat it too.

You’re now driving your car to and from your commutes but you have the peace of mind in knowing that should something happens on the road or while it’s parked, somebody else is sharing with you the major portion of the financial loss.

You might be wondering as to why I’m using material possessions as examples of assets in this article; I personally don’t consider vehicles as assets since they depreciate in value over time but using a vehicle, makes these concepts easier to understand for most people.

The best financial risk management strategy is called “risk transfer”. As the name implies, you don’t have to assume, avoid or even share the risk; you can transfer the financial risks altogether.

Of course, this is not applicable in all scenarios but it can effectively protect you and your loved ones against life’s serious events that are beyond your control.

While you may be taking the necessary measures in trying to avoid a serious illness, injury or premature death; these things are sometimes unavoidable as these events are beyond anyone’s control.

Sometimes, life happens!

Transferring your financial risks against things that are beyond your control protects your financial well-being, security and future, in case they happen.

In the previous strategy, I’ve used an expensive car like the Model X as an example but really, when it comes to financial risk management, we’re protecting a far-more valuable asset than any of the material possession that you either dream of or would have already acquired.

We’re protecting your personal “money-making machine”, that if damaged or lost due to a serious life event, will stop producing money for you and/or your loved ones.

Most people assume risks by default, some for lack of knowledge, some think it’s costly to share or transfer their financial risks to financial institutions, some, well, they hope that it won’t happen to them.

Now that you have an idea of what financial risks are and how you can effectively manage your personal financial risks, avoid assuming any type of risk in your financial life, as assuming your risks means assuming the financial hardships or losses that may result from serious life events.

You have to protect yourself and loved ones by implementing a combination of the 3 financial management strategies mentioned in this article.

Avoid. While it’s nearly impossible to avoid the possibility of serious life events affecting you and/or your loved ones, there are things you can do to minimize the probability of these events. Clean and healthy living for example, may help you avoid the risk of a serious illness or premature death.

Share and/or Transfer. These two strategies are your best bet when it comes to protecting your financial security and future. Instead of simply avoiding the risks, you have to implement effective financial risk management strategies that allows you to either share or transfer the financial risks to another entity so you mitigate your potential losses.

We can help you draw up a plan that share and/or transfer your risks to insurance companies by implementing the following plans:

• Health Insurance
• Critical Illness Insurance
• Disability Insurance
• Life Insurance

How Risks Affect Your Personal Finance

Life isn’t perfect and sometimes, things don’t often go as planned and there are life events that may potentially roadblock our financial goals, unfortunately, most life events don’t come with advanced warnings, so, the majority of us fail to plan for them.

Most people don’t plan to fail, they fail to plan John Beckley

Below are examples of life events that may result to personal financial instability:

• Job Loss and/or Business Setback

Job loss and business setbacks have similar effects, both scenarios lead to temporary loss of or reduction of income but the effect of such events are usually temporary because if you’re a breadwinner, you will do everything in your power to get back on track with your income, by usually getting another job or doing side-gigs, like driving for Uber (and/or TappCar), delivering food for UberEats or SkipTheDishes or Door Dash, selling stuff or offering any other services that are within your skill set, to survive and make ends meet.

If you migrated from another country, you may now be aware that there’s no such thing as security of tenure in Canada, everyone’s dispensable and you can lose your job or the security of a 9 to 5 income any time.

You may probably qualify for EI or employment insurance but that depends on whether or not your job loss as a result of your own doing; if not, and you have enough EI hours, you’ll receive 55% of your average weekly earnings with a cap of $54,000.00 in annual insurable earnings amount, which means, the maximum you’ll ever receive is $573.00 per week.

Employment insurance is an example of a risk-sharing risk management strategy, so you don’t absorb 100% of the financial impact in case of a job loss, however, while it’s good that EI exists in Canada, the best way to hedge against the financial impact of a job loss or a business setback, is to have an emergency fund in place.

An emergency fund, will help you supplement the shortfall on your EI benefits and hedge from the possibility of not qualifying on such benefit.

Divorce is a sensitive topic but is sometimes completely avoidable if both spouses are willing to work things out, however, the possibility is always there. There are so many impacts that may result from this life event, both emotional and financial, not only to yourself and your spouse but to your kids as well.

While I can’t cover every possible effect that results from a divorce, I would like to zero-in on how you can financially protect yourself from the financial impact.

If you haven’t gone the marriage path yet, consider putting in place a prenuptial agreement, this too is a sensitive topic but by doing so, you are not only protecting yourself financially but your partner as well, should the marriage fail. This puts things into perspective, before you tie the knot.

If you’re already married and was not able to put in place a prenuptial agreement; work things out as much as you can because there should be a reason why you married each other, go back to that “why”, I believe that should be reason enough to stay together.

Of course, I’m not saying that you should stay in an abusive relationship just to avoid financial losses due to a marriage breakdown because if you’re in such a situation, I believe, you’ve already lost a lot.

If things can’t be worked out, here are a few things that you can do to protect yourself financially from a divorce:

As soon as a decision to divorce or a separation has taken place; legally establish the separation in writing and in motion asap. Talk to a lawyer to have this in place because by legally establishing your separation even before the divorce date, you are separating your finances from that of your future ex, which means that any money you earn from the date the separation was established is solely yours.

Also, it’s time to do an accounting of what assets and liabilities you have from that of your spouse.

Separate all joint bank and credit card accounts and split your cash and debts accordingly.

If you are jointly responsible for your mortgage, notify your mortgage lender of the coming change.

Build your own credit score if you don’t have one established yet; it’s also a good idea to get a credit report and closely monitor your credit until after the proceedings are done for obvious reasons.

Divorce will not affect nor revoke your Will and Power of Attorney. You have to revise them at once.

Whether you’re working to provide for yourself and loved ones, growing a business, or building wealth for retirement, there are certain risks that may road-block your goals, and these risks may come without notice.

During such a difficult time, there will be a lot of things that you may take for granted, like changing your insurance and investment beneficiaries. Also check for trading authorizations that you may have granted your spouse.

There are three professionals that you should work with during this difficult time.

• Your financial advisor
• A lawyer, and
• An accountant.

A financial advisor can help you update your financial policies. Your lawyer and accountant will help you with the proceedings and protect your financial interest for a fair settlement.

The two life events mentioned above are usually uninsurable as they are not pure risks but there are a lot of things that you can do to mitigate or minimize the financial risks to yourself and/or loved ones.

The risk of being inflicted by serious illness is one of the more serious life events that are beyond our control as human beings but this life event is considered a pure risk, which is insurable, meaning, to mitigate or minimize the financial risks of such an event, we can “transfer” this risk to another entity like implementing a critical insurance illness policy.

A serious illness may prevent a person to actively work in a job, business, or profession, which results in loss of or reduced income. This is usually the financial risk that results from such an event. If you transfer this risk to an entity such as an insurance company, the insurance company absorbs the financial risks associated with such an event, instead of you absorbing all the risks.

Similar to serious illness, a disability whether temporary or permanent prevents a person from doing what he or she normally do for a living. The financial risk of a disability is also considered “pure risk”, which is also insurable.

While critical illness insurance pays you a lump sum benefit amount, disability insurance pays you on a monthly basis, replacing up to 80% of your monthly income so you need not worry as to when your next paycheck is coming and instead focus more on getting well.

Transferring the financial risks in case of disability (to an insurance company) is an effective financial risk management strategy the minimizes the financial impact of such an event in case you’re unable to actively work for a living.

A disability may be temporary or may be permanent, we can help you explore the best options that meet your needs .

Death is inevitable, hopefully, it comes at old age but such is one of those serious life events that we don’t have control over. Either we live long or we die young; dying young is premature death and unfortunately, it happens to some people.

While we can’t control as to when we’re going to pass-away, we can manage the financial risks involved in case we pass-away prematurely, so the people who rely on us for financial support can continue living the same quality of life we’re able to provide for them while we’re alive an well.

Life insurance can replace a person financially by replacing the person’s income in case of premature death, pay-off the immediate financial needs in case of such an event, pay-off the deceased’s financial obligations such as consumer debts, mortgage, leave the necessary funds for his or her children’s post-secondary education or even leave a legacy.

Proper life insurance planning minimizes the financial impact of premature death, we can help you implement a well-planned financial risk management strategy that protects your loved ones’ financial security and future against premature death.

What is the cost of risks?

A lot of people gets hung up on the costs of managing their risks, but have you ever thought of the true cost of risks?

The cost of risks differs from person to person, it depends on how much you’re currently worth to yourself and those who depend on you for financial support.

If you’re unable to work today due to a serious illness or prolonged disability, or premature death, would you or your loved ones be able to afford the same quality of life? or would you or your loved ones experience financial hardships?

That is the true cost of risk!

If you have a money-making machine, how much would you pay to replace that machine, or at least the money that it prints on a bi-weekly or monthly basis?

The Objective of Risk Management is to minimize or mitigate the financial risks of events that are beyond your control.

As mentioned, there are two types of risks.

One is speculative in nature and therefore avoidable or controllable, so you have the choice of whether or not you should take the risk or applying measures and strategies that minimizes the impact without transferring the risk to someone else.

Pure risk, are risk that occurs due to events that may or may not happen even when we’re not taking an action in search of gains. This type of risk is shareable and transferable.

You implement financial risk management strategies to protect an asset from losses so your financial well-being either stays the same or the impact is minimized in the worst event that you have to assume some of the losses.

I couldn’t emphasize more the importance of financial risk management in protecting your personal financial well-being. An effective risk management strategy helps you and your loved ones maintain the same or near the same lifestyle should a serious life event ever occur to you or any one of the breadwinners in your household.

Most people don’t give personal financial risk management much thought and tend to assume all the risks themselves, not knowing that they can actually transfer the financial risks to someone else so they don’t have to dip on their assets or retirement funds, should a serious life event affect their ability to actively work for a living.

As financial security advisors, we help our clients plan and maintain their financial security should a serious life event ever affect their ability to make a living for themselves and/or loved ones.

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Understanding Financial Risk Management

A business with poor financial risk management can quickly go downhill–not only in the form of financial instability but also damaged reputation among employees, customers, and potential business partners. 1 By gaining deeper insights into financial risks and how to manage them more effectively, experienced financial risk professionals can make better decisions–ones that enhance financial stability while minimizing the possibilities of losses.

This article explores the main types of financial risks and ways to implement an effective financial risk management process.

Types of Financial Risks

Financial experts may encounter different kinds of risks, including:

1. Market Risk

The financial market's overall performance can pose a risk of financial losses. 2 This risk can be caused by fluctuations in:

• Interest rates
• Product prices
• Exchange rates
• Stock prices

Understanding market risk requires careful observation of market conditions. Organizational leaders use the insights they gain to predict potential adverse changes and quantify risk exposure. They use techniques such as:

• Stress testing: A virtual simulation technique used to examine an organization's resilience against adverse potential financial events, 3 stress testing helps determine how long a company can stay in business without gaining any new customers or clients 4
• Value-at-Risk (VaR): A measurement that quantifies the potential loss an investment may experience over a specific period and the probability of that loss happening; 5 risk managers use this technique to measure and control exposure

2. Credit Risk

Credit risk is the potential loss incurred from a borrower’s inability to meet contractual obligations or repay a loan. When the risk becomes reality, it may interrupt cash flow and increase debt collection costs. 6

While it’s difficult to identify with absolute certainty who will default on a loan, thoroughly evaluating and mitigating credit risk can minimize loss. Financial risk management software can be useful in that process.

Assessment may include:

• Evaluating the borrower’s credit history, capital, and capacity to repay
• Checking the financial statements of the individual or entity asking for a loan
• Analyzing the borrower’s industry to determine the probability of default and set appropriate interest rates

Mitigation may involve:

• Collateral requirements: requiring a borrower to pledge assets as security against a loan
• Credit analysis: evaluating the creditworthiness of a borrower before extending credit
• Credit insurance: coverage to protect against non-payment of debts

3. Operational Risk

Operational risks stem from within the business and may result from internal inefficiencies such as human errors, technological disruptions, or inadequate processes. 7 An example is a financial loss caused by failure to deliver a product on time or to specification. This may result in extra costs to remake the commodity. 8

Identifying and mitigating operational risks may include:

• Conducting regular audits
• Strengthening internal controls
• Investing in robust technology

With fast-paced technology , companies use powerful risk management tools integrated with a key risk indicator (KRI) to assess operational risks.

Elements of Financial Risk Management

An organization can’t operate risk-free. But its leaders can take thoughtful steps to understand and manage its risks effectively. There are four fundamental elements of financial risk management:

Risk Assessment and Identification

Risk assessment and identification involves searching for anything that threatens financial stability. The threat can be internal, such as operational inefficiencies, or external, such as market volatility. 9 Historical data analysis, industry research, and brainstorming sessions can be useful in identifying risk.

Risk Analysis

Risks are now identified. Next, an organization individually analyzes the risks, which may involve finding out the causes of each threat, applying ratings, and developing a potential response plan. A risk can be rated based on the probability of occurrence and its potential impact–the extent of its consequences. To create this analysis, financial risk managers and their teams use a risk rating matrix. 10 It visually showcases the overall likelihood and severity of threats.

A risk rating matrix

This makes it easy to prioritize risks. As a result, an organization can effectively allocate more resources and attention to critical events that need to be addressed first. These are events that are most likely to occur and could have the greatest impact if they happen.

A 2023 Forbes article emphasizes that, in addition to rating risks, risk analysis includes identifying the potential costs related to specific risks and having more than one responsive course of action for each. 9

Risk Modeling: Simulation

Over the years, risk modeling has become popular in financial services, 11 and for a good reason. If financial institutions don’t detect credit risks in advance, they get exposed to a high possibility of default and loss.

To mitigate this risk, they use predictive simulation models that can identify a person's probability of defaulting on a loan. Using machine learning and financial statement analysis, these models provide insights into the person’s credit risk at a particular time. 12 Institutions can use the data to inform lending decisions.

Risk Mitigation: Control

While it’s difficult to eliminate risks entirely, an organization can manage them using effective mitigation strategies. It can implement a plan that minimizes or eliminates the likelihood of an event occurring and reduces the consequences if it does.

When designed correctly, risk mitigation strategies enable organizations to be resilient and navigate uncertainties more effectively. The strategy may include:

• Contingency planning: a plan B for when a situation prevents a business from operating as usual
• Insurance policies: protection to mitigate losses that are beyond the organization’s control
• Hedging: offsetting risks with complementary investments or strategies 13
• Loan portfolio diversification: spreading risk by investing in a variety of loans or borrowers to reduce potential losses

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• Retrieved on July 16, 2023, from blog.reputationx.com/reputation-businesses#
• Retrieved on July 16, 2023, from investopedia.com/ask/answers/062415/what-are-major-categories-financial-risk-company.asp
• Retrieved on July 16, 2023, from investopedia.com/terms/s/stresstesting.asp
• Retrieved on July 16, 2023, from businessinsider.com/strategy/how-to-conduct-a-quick-business-stress-test-to-help-strengthen-your-companys-finances/9zf0gwc
• Retrieved on July 16, 2023, from investopedia.com/terms/v/var.asp
• Retrieved on July 16, 2023, from investopedia.com/terms/c/creditrisk.asp
• Retrieved on July 16, 2023, from investopedia.com/terms/o/operational_risk.asp
• Retrieved on July 16, 2023, from cdn2.hubspot.net/hubfs/2752422/De%20La%20Rue%20Feb%202017/PDF/2015-8-risk-and-risk-management.pdf?t=1529060959274
• Retrieved on July 16, 2023, from forbes.com/sites/melissahouston/2023/01/11/risk-management-for-your-business-what-you-need-to-know/?sh=453450404a04
• Retrieved on July 16, 2023, from unstats.un.org/unsd/methodology/dataquality/references/Australia_ABS_Statistical_Risk_Management_Process_Guide.pdf
• Retrieved on July 16, 2023, from deloitte.com/global/en/services/risk-advisory/perspectives/risk-modeling.html
• Retrieved on July 16, 2023, from corporatefinanceinstitute.com/resources/commercial-lending/credit-risk-analysis-models/
• Retrieved on July 16, 2023, from investopedia.com/terms/h/hedge.asp

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7 Personal Brand Statement Examples for Finance Professionals

Understanding the importance of a personal brand statement.

When it comes to building a successful career, having a personal brand statement is crucial. It is a concise yet powerful description that encapsulates who you are, what you do, and what sets you apart from others in your field. This strategic tool serves as a compass, guiding you towards your professional goals and helping you make a lasting impression on potential employers.

A personal brand statement goes beyond a simple elevator pitch. It is a carefully crafted message that showcases your unique skills, experiences, and qualities. It is an opportunity to tell your story and highlight the value you bring to the table. By defining your personal brand statement, you establish your professional identity and position yourself as a top candidate in the minds of employers.

Defining a Personal Brand Statement

So, what exactly is a personal brand statement? It is a concise summary that captures the essence of who you are as a professional. It should be clear, compelling, and memorable. Your personal brand statement should answer the question, "What makes you different from others in your field?"

When crafting your personal brand statement, consider your unique skills, experiences, and qualities that set you apart. Think about your core values, your passions, and your professional goals. By aligning these elements, you can create a personal brand statement that truly reflects your authentic self.

Why Finance Professionals Need a Personal Brand Statement

In the finance industry, where competition is fierce and talents are abundant, having a personal brand statement is more important than ever. Finance professionals need to find ways to stand out in a crowded job market and differentiate themselves from the competition.

A well-crafted personal brand statement allows finance professionals to showcase their expertise, highlight their unique skills, and demonstrate their value to potential employers. It serves as a powerful tool to position themselves as the ideal candidate for finance roles.

Furthermore, a personal brand statement helps finance professionals establish their professional identity. It communicates their professional goals, their areas of specialization, and their commitment to excellence. By defining their personal brand statement, finance professionals can build a strong reputation and attract opportunities that align with their career aspirations.

Ultimately, a personal brand statement is not just a statement; it is a strategic asset that empowers finance professionals to navigate their career path with confidence and purpose.

Key Elements of a Strong Personal Brand Statement

A strong personal brand statement is essential for establishing a powerful and memorable presence in the professional world. It serves as a concise summary of who you are, what you bring to the table, and what sets you apart from others in your field. Crafting a compelling personal brand statement requires careful consideration of several key elements.

Clarity and Conciseness

One of the most important aspects of a strong personal brand statement is clarity. It should effectively communicate your unique value proposition and professional identity in a clear and concise manner. Avoid using jargon or fluffy language that may confuse or dilute your message. Instead, focus on highlighting your key strengths, accomplishments, and areas of expertise that make you stand out.

For example, if you are a finance professional with a strong background in risk management, you might emphasize your ability to identify and mitigate potential financial risks, your track record of successfully navigating complex regulatory environments, and your expertise in developing robust risk management strategies.

Authenticity and Uniqueness

Your personal brand statement should reflect your authentic self and what makes you unique. It should capture your personality, values, and passions, allowing potential employers or clients to get a glimpse of who you are beyond your professional achievements. Emphasize the qualities that set you apart from other finance professionals and make you a valuable asset to any organization.

For instance, if you have a passion for sustainable finance and integrating environmental, social, and governance (ESG) factors into investment decisions, you could highlight your commitment to responsible investing and your ability to generate financial returns while creating positive social and environmental impact.

Alignment with Professional Goals

A strong personal brand statement should align with your professional goals and aspirations. It should convey your long-term vision and the direction you want to take your finance career. By clearly articulating your ambitions, you can attract opportunities that align with your desired trajectory.

For example, if your goal is to become a CFO of a global organization, your personal brand statement might emphasize your strategic financial acumen, leadership skills, and ability to drive financial performance across diverse markets and geographies.

In conclusion, a strong personal brand statement is a powerful tool for establishing your professional identity and differentiating yourself from others in your field. By focusing on clarity, authenticity, and alignment with your professional goals, you can craft a compelling personal brand statement that resonates with your target audience and opens doors to exciting opportunities.

Crafting Your Personal Brand Statement

When it comes to crafting your personal brand statement, there are several key factors to consider. It's not just about summarizing your skills and experiences, but also about showcasing your unique value proposition and incorporating your personal values and passions. By effectively communicating your expertise and experience, you can create a personal brand statement that truly sets you apart in the finance industry.

Identifying Your Unique Value Proposition

One of the first steps in crafting your personal brand statement is identifying your unique value proposition. Take some time to reflect on your strengths, accomplishments, and areas of expertise. What sets you apart from others in the finance industry? Maybe you have a knack for problem-solving or a deep understanding of financial analysis. Whatever it may be, make sure to highlight these specific skills, qualities, and experiences that make you valuable and different.

Moreover, it's important to consider how your unique value proposition aligns with the needs of the finance industry. Are there any emerging trends or challenges that you can address? By understanding the current landscape and tailoring your personal brand statement accordingly, you can position yourself as a sought-after professional in the field.

Incorporating Your Personal Values and Passions

While your skills and experiences are important, incorporating your personal values and passions into your personal brand statement can add depth and authenticity. Think about what truly drives you and what you are passionate about in the finance industry. Maybe you have a strong belief in ethical investing or a passion for helping individuals achieve financial stability.

By aligning your personal values and passions with the finance industry, you can create a personal brand statement that resonates with others. This not only sets you apart from the competition but also showcases your genuine commitment to making a positive impact in the field.

Communicating Your Expertise and Experience

Once you have identified your unique value proposition and incorporated your personal values and passions, it's time to effectively communicate your expertise and experience. This is where you can highlight your key achievements, roles, and responsibilities to demonstrate your credibility as a finance professional.

Consider using action verbs and powerful language to make your personal brand statement more engaging and memorable. Instead of simply stating your job titles and responsibilities, focus on the impact you have made in your previous roles. Did you successfully lead a team through a complex financial restructuring? Or maybe you played a key role in implementing cost-saving measures that significantly improved the company's bottom line.

By showcasing your expertise and experience in a compelling way, you not only capture the attention of potential employers or clients but also leave a lasting impression. This can ultimately lead to new opportunities and further establish your personal brand in the finance industry.

Tips for Writing an Effective Personal Brand Statement

Writing a personal brand statement is an essential step in showcasing your unique qualities and professional value. It serves as a concise summary of who you are, what you do, and what sets you apart from others in your field. While crafting your personal brand statement, there are several key factors to consider to ensure its effectiveness and impact.

Using Action Verbs and Powerful Language

One crucial aspect of writing an effective personal brand statement is the use of action verbs and powerful language. These elements help create a sense of energy and enthusiasm, capturing the attention of employers and making your statement more memorable. Instead of relying on passive phrases, opt for strong and impactful statements that showcase your skills and achievements.

For example, instead of saying, "I have experience in project management," you can say, "I excel in project management, consistently delivering successful outcomes and exceeding expectations." This revised statement not only highlights your expertise but also conveys a sense of confidence and competence.

Keeping Your Audience in Mind

When crafting your personal brand statement, it's crucial to consider your target audience. Whether it's potential employers, recruiters, or industry professionals, tailoring your statement to resonate with their specific needs and expectations is essential. By understanding your audience, you can address their pain points and demonstrate how you can provide value.

Researching the industry and the specific company or organization you are targeting can help you gain insights into their values, goals, and challenges. Incorporating this knowledge into your personal brand statement will make it more relevant and increase your chances of making a positive impression.

Regularly Updating Your Personal Brand Statement

It's important to remember that your personal brand statement is not set in stone. As you gain new skills, experiences, and achievements, it's crucial to update your statement to reflect your growth and progress. Regularly reviewing and revising your personal brand statement will ensure that it remains relevant and impactful.

Consider the new skills you have acquired, the projects you have successfully completed, and the accomplishments you have achieved since you last updated your statement. Incorporate these new elements into your personal brand statement to showcase your continuous growth and demonstrate your ability to adapt and thrive in a dynamic professional environment.

By regularly updating your personal brand statement, you not only keep it fresh and engaging but also demonstrate your commitment to self-improvement and professional development.

In conclusion, crafting an effective personal brand statement requires careful consideration of the language used, understanding of the target audience, and regular updates to reflect personal growth. By implementing these tips, you can create a compelling personal brand statement that effectively communicates your unique value and sets you apart in the professional world.

In conclusion, a personal brand statement is a powerful tool that finance professionals can use to differentiate themselves in a competitive job market. By crafting a clear, concise, and authentic statement that aligns with their unique skills, values, and goals, finance professionals can position themselves as top candidates and attract exciting career opportunities. Use the examples and tips provided in this article as a guide to create your own compelling personal brand statement and take your finance career to new heights.

About the Author

Hi, I'm Justin and I write Brand Credential. I started Brand Credential as a resource to help share expertise from my 10-year brand building journey. ‍ I currently serve as the VP of Marketing for a tech company where I oversee all go-to-market functions. Throughout my career I've helped companies scale revenue to millions of dollars, helped executives build personal brands, and created hundreds of pieces of content since starting to write online in 2012.

As always, thank you so much for reading. If you’d like more personal branding and marketing tips, here are more ways I can help in the meantime:

• Connect with me on LinkedIn .
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Personal statement

Risk Management studies are the best studies which give a lot of skills and enough knowledge about administration and managing of different business and organizations. The MSc Financial risk management degree is one of the best degrees which attract people from a wide range of academic disciplines. As in today's world the business became expanded and it was not controllable without proper management. From their, the importance of financial risk management became dominant.. Now a lot of people have studied business administration courses and they are very successful in their jobs and running their businesses very successfully.

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Qualitative Research in Financial Markets

Johan Marx , Cecile de Swardt

Purpose-The purpose of this paper is first to determine the competencies required of risk managers and second to consider the implications of such competencies in determining modules for inclusion in the curriculum framework of an undergraduate qualification in risk management. Design/methodology/approach-A qualitative research approach was followed, involving risk management professionals in a focus group and making use of interactive qualitative analysis (IQA). Findings-The competencies identified are managerial and risk management knowledge, attributes such as assertiveness and steadfastness and ethical values, as well as people and technical skills. These are explained in greater detail in this paper. Research limitations/implications-The unique contribution of the current research was the innovative use of IQA for data collection, the removal of subjectivity and the rigour in analysing and presenting the results. The results provide a starting point for designing a curriculum that will both meet the requirements of the professional body and will equip graduates with the best possible combination of knowledge, attributes, values and skills needed by the risk management profession. The implications for further research include that a comparative IQA study of the competencies of risk managers using academics from the field could be undertaken, as well as a study of the design, benchmarking and validation of a proposed curriculum for an undergraduate degree in risk management. The purpose of this study was not to compile a curriculum for a new BCom (risk management). However, this was beyond the scope of the current study. IQA uses rigour and eliminates the bias of the researcher, and the one limitation of this research lies in the use of a focus group, which resulted in the findings not being generalizable as the case would have been with a representative sample used in the positivist paradigm and using appropriate statistical analysis. However, this study was exploratory and could serve as a valuable starting point for further research in this area to perform a comprehensive curriculum development. Practical implications-This study found that constituents of the focus group perceived that the following competencies are required of risk managers, namely, knowledge, skills, attributes and values. These competencies correspond closely with the competencies indicated in the Risk and Insurance Management Society (RIMS) Professional Core Competency Model, except that RIMS subdivides knowledge into three categories, namely, business, organisational and risk management knowledge. Similarly, RIMS distinguishes between management skills and technical skills. The attributes identified by the focus group of this study were similar to those identified by RIMS. However, the focus group emphasised values such as integrity, ethical conduct, respect and accountability. However, unlike RIMS, these were not perceived as one of the five core competencies, but rather as a stand-alone competency in its own right, which risk managers need to be successful. RIMS could consider reviewing its core competencies by allocating three closely related aspects, namely communication, collaboration and consultation to technical skills. Core competencies may be replaced by core values, which are literally at the centre of all the competencies required. Such core values are enhanced by the RIMS Code of Ethics (2019) and significantly contribute to the professionalization of risk management. RIMS could QRFM 12,1 96 Open Rubric also consider providing guidelines to universities for those competencies that could be taught or learnt, to be included in their curricula and to accredit universities who meet such requirements. Social implications-The findings of this study also serve as a starting point for the reintroduction of a BCom (risk management) degree by Unisa. Despite the requirements of the South African Qualifications Authority (SAQA) and the Council for Higher Education (CHE), this study demonstrated that a specialised degree in risk management needs to be offered to meet the need expressed by IRMSA for professional risk managers in Southern Africa, and such a degree should ideally be curriculated based on the competencies identified in this article. The implication for public policy is that SAQA and the CHE need to reconsider their rigid stance about the composition of specialised qualifications, and rather set a range of 33-50% for subjects from the field of specialisation that must be included in the curricula of specialised degrees. As indicated by this research, a combination of subjects from different disciplines is required to enhance the competencies and employability of risk management graduates. Originality/value-The use of IQA is a novel way of ensuring rigour and objectivity in arriving at the required knowledge, attributes, values and skills of risk managers, and aids in the compilation of a new curriculum for an undergraduate qualification in risk management, thus ensuring the qualification will provide a competency-based qualification that will meet the needs of the profession.

Westford University College

Mathias Mathias

Understand the planning, budgeting, and forecasting concepts of finance management Understand the control of performance management and internal control environment for risk control Understand the financial statement and decision analysis, including risk management Know the shareholder/ corporate value creation, including M&As and disposals Understand the control and management of operational and financial risk in a business

Carolina Lita Permatasari

Financial literacy is an important part of the realization of student management in relation to improving financial literacy so that it creates knowledge and behavior in financial management that has been carried out so far. Students need to realize financial management by increasing financial literacy which is what they learn during lectures. Therefore, students are able to carry out financial management with the existence of financial literacy. This research was conducted at the SWCU FKIP Economic Education using a qualitative method with a snowball sampling technique and with data collection techniques, namely primary data, interviews and documentation, which aims to determine student literacy towards financial management of SWCU FKIP economic education students. The results of this study indicate that students already understand the basics of finance but there are several things that must be underlined in financial literacy, namely knowledge of investment and insurance which is ...

The Journal of Risk and Insurance

Lisa Gardner

abdul khabir rahmat

Due to rapid growth of the world economies in the past few decades, the importance of implementation of risk management into strategy formulation of any type of organizations has been understood by many establishments. The nature of variety of unexpected risks upcoming are increasing due to rapid competition, fast pace technological developments and varying behavior of customers which is difficult even to predict. Educational institutions have not been able to escape from these unpredictable risk components as they also expose to the same amount of uncertainties as other business organizations under the present situation. Implementation of enterprise risk management into business organizations as well as higher education institutions has become popular in the recent past and there have been many research studies carried on the importance of the topic. Many international organizations also have taken the leadership to helping risk managers of organizations under this dynamic atmosphe...

International Journal of Advanced Research (IJAR)

IJAR Indexing

The education which imparts students the expertise to be managers, business leaders or professors in business education is known as Management education. Whenever the issue of Management education is discussed, the discussion hovers around post-graduate management education. The degree of MBA is considered by laymen to be a passport to well-paid jobs with great prospects for advancement. According to a report by ASSOCHAM Education Committee, though MBA aspirants are fleeced by B-schools in terms of charging exorbitant fees, only 7% MBA graduates are actually employable which speaks volumes about the quality of education imparted by such schools. The same report states that around 220 B-schools had shut down in the last two years in the country and at least 120 more are expected to wind up in 2016. Under such circumstances, the question is: how and where will the management degree aspirants get quality management education? This paper is an attempt to assess if this gap in management education can be filled in by undergraduate management education. The paper reviews the aspect of curriculum and pedagogy at undergraduate level and submits recommendations on strategies that will help in the developing and sustaining undergraduate management education in line with contemporary business trends coupled with societal care.

International Journal of Project Management

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Education demands changes on a moment basis, as it always is seeking to define or redefine the perfect. Yet Education sector is subject to the least change over time and across the globe. The most likely aim of MBA is creating global leaders, which essentially require flexibility in the curriculum and learning experiences to promote and practice innovation through consistent industry interface. The research objective is on finding the causes of divergences in supply and demand of MBAs in the wake of recession and the long term impact of management restructuring on the potential enrollment of MBAs. Trivial management certifications are no longer attracting genuine entry level MBA jobs. At this point, revisiting the goals and strategies of management education becomes relevant. As the research universe is globally spread, there is little scope of quantitative validation of the relationships. Research is devised as a causal analysis of Management Education followed by a SWOT analysis on Management Education which throws light into the potential future of B-Schools. At the same time, broader scope of management reflected in the inter-disciplinary studies and increasing number of specializations offer wider opportunities to adequately explore and integrate the most modern practices of management in different areas of knowledge. However, these opportunities demand more of diverse skills and dynamic practices, which highlight the importance of an internal audit of resources to match the external opportunities, eventually deriving means to enrich the human capital potential.

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Personal Statement for Msc Banking and Risk

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Personal Statement for Postgraduate study in MSc Banking and Risk.

My fascination with business news on television, coupled with a passionate interest for the economics aspect of my Geography course at GCSE motivated me to study Economics at A Levels. During A levels, my awareness of the broad applications of economic theories to real life increased. This was a motivating factor in my decision to study Economics at University. Through careful considerations of my interests, preferences, abilities and options, I have decided to specialize in Banking by applying for an MSc in Banking and Risk.

At University, I took up the following finance modules; Financial Markets and Institutions in stage 2 and Financial Economics in stage 3. I performed better in the Financial Markets and Institutions module and I believe that this may be down to my choice to write an essay on ‘Banking Regulations and Financial Systems’, out of the four given options as this was the subject area that interested me the most. Although this does not excuse my performance in the Financial Economics module, where I attained a 2:2, I do not believe that my mark in Financial Economics is an accurate reflection of my ability to study Banking and Risk. I am excited at the prospects of studying the banking and risk modules offered at your university, as I strongly believe that it will equip me with the understanding and skills needed to excel in the Banking and Finance industry.

Furthermore, I am also a member of the Finance and Investment Society at my University and have spoken to different finance professionals to help improve my understanding of the different careers in banking and finance. Therefore, I believe that an understanding of Risk combined with Banking will improve my performance in my future career, for example it can enable me to effectively minimize the negative effects which risks may have on the financial result and capital of a bank or business.

If selected, I believe that my hard-working nature, as well as experiences that I have gained on working smartly will enable me to excel academically. Additionally, studying Economics at university has helped develop my mathematical understanding, research skills, essay writing skills, report writing skills, team working skills, presentation skills, excel and SPSS skills. Finance modules have also introduced me to the concept of valuation and different methods of valuation. I will be able to apply these skills and knowledge when required. Nevertheless, I will ensure to have the right attitude to enhancing and learning new skills and will prove myself to be an excellent student. To further prepare myself for the world of Banking and Finance, I have acquired an internship as ‘Finance Directorate Intern’ at International Institute of Tropical Agriculture, where I will be trained on Cash Flow Planning, Asset Management , and Analysing Financial Reports and strategies

Moreover, work related experiences such as performance poetry, founding and leading the International Cooking Society, being a Bloomberg Student Ambassador, Teaching Assistant and Field Marketer, as well as, dealing with unexpected personal health circumstances and a relative’s unexpected health circumstances whilst studying have helped to build the well rounded person that I am today and will assist me in adapting to the self-management and social challenges of being a graduate student.

Last but not least, xxxxxxxxx University is well-respected all over the world by many, including my friends who attend the university and it would be a great opportunity to be taught at your university.

I don't see the spark that took you from studying economics in high school and undergrad, to going into banking and risk. Also, the examples you provide of potential uses for your knowledge of risk and banking are blunt and don't showcase any interest towards these areas or any prerequisite knowledge. You don't provide any rationale for why you got a below par mark in your financial economics module either (connect it to the health issues maybe?). Your last sentence as to why you want to go to X university comes off as an afterthought with no real added value or any statement expressing why this institution and program would be a good fit for you and vice versa. Overall the letter just seems generic and uninspired to me and you just list ideas and events but don't do a good job of connecting them to why this university and this program/subject area is an ideal fit for you. Don't take this personally, this is just my opinion of the letter. Best of luck to you in getting in!

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