In general terms, the risk-management process involves taking steps to cope with risk and thereby to minimize losses. If you want to undertake a comprehensive plan of risk management, here are the basic steps you should follow:
- Identify and evaluate the various risks to which you are exposed in your life.
- Identify and evaluate the potential losses associated with each particular risk.
- Formulate and map out a strategy or set of strategies for dealing with the risks/losses you've identified, both individually and collectively.
- Put the strategy(ies) into action.
- Periodically review the plan you've set up and, where appropriate, make changes to it as your circumstances change.