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Risk

The potential that a chosen action or activity will lead to a loss

I often write about how safe and secure structured settlements are, this month, let’s look at the other side of the coin: let’s discuss risk. Some people believe that participating in dangerous activities can make us feel more alive. Others feel that people do risky things due to evolution. Under this theory, deep in the dark recesses of our brains where the control centers for survival and reproduction are located, preprogrammed impulses stimulate some people to take risks.

Early human risk-taking might have included simply wandering off of established trails, possibly to find a new source of water or game. It might also have included eating a new plant or other potential food item. These acts might not only have triggered a pleasurable excitement in the risk taker, but could also have profoundly benefited his or her group, as the group could either benefit in the discovery - or continue on with only the memory of the risk taker, learning from that person's fatal mistake.

Today, we humans continue to take what are, in many cases, unnecessary risks. Despite the virtual elimination of physical risk from our daily lives, the craving for action still runs strong in our genetic makeup. This basic trait may be enhanced and even strengthened by the fact that modern society gives risk takers positive behavioral reinforcement. Everyone has seen how admired astronauts or race car drivers are. They risk their lives for the thrill, fame or fortune the risk brings or to broaden our entire species' horizons.

But what of the seemingly endless parade of people who risk life and limb just to post their daring do (successful or not) on YouTube? How do we explain this behavior? Ask any mountain biker, base jumper, or extreme skateboarder why they take part in their respective sports, and most of them will mention the word "fun."

Risk-taking can occur in more mundane forms than the spectacular outdoor exploits that most of us just watch in awe, horror, or disbelief. For instance, some surgeons have reported getting the same adrenaline surge that mountaineers and other athletes have experienced, although their "rush" is the product of standing in one place for 13 hours to save patients from cancer or other serious illness. Even such personal acts as giving up a dull but secure job to take an exciting new position can produce the rejuvenating exhilaration of excitement that comes with risk. Indeed, some people might consider this riskier than parachuting or mountain climbing, depending on their priorities.

Taking risks is a form of what we might collectively call "gambling"—whether with one's life or one's professional status or with one’s finances. The pursuit of gambling itself, for instance, can and does lead to financial losses, and may cause personal ruin. So you would think that to the risk-taking personality, gambling, with its threat of financial ruin and promise of greater riches, would be just as seductive as deep-sea exploration is to the diver.

But, to the contrary, the ability or desire to take personal physical risks does not translate into the ability or desire to take financial risks. It takes a great deal of courage and risk tolerance to be a professional race car driver, yet in a recent interview four-time NASCAR Champion Jeff Gordon was asked how he invested the millions of dollars he has won over the years. His answer was: in some New York real estate and the rest in a conservative portfolio earning a small yet safe return. He said “I know where I take the biggest risk; that is on the race track.”

Many risks are conscious risks intentionally taken by the individual in order to experience a gain of some kind, let it be for king and country, fame and fortune, or just an adrenaline rush. Some risks are expressly avoided by people known to be highly risk tolerant. But all those people approach risk consciously and they are talking about known risks. But what about unknown risks? A huge number of other risks are encountered naively or carelessly.

An injured claimant who is in the process of resolving their case is about to step over a threshold from status quo circumstance to exceptionally high risk environment. Many, in fact, most claimants settle their cases with little to no knowledge of the risks they face. Not surprisingly many claimants fall victim to risks that are known and foreseeable to the experienced and educated experts that work in this realm. It is amazing to me that people that who are nervous about boarding a commercial airliner, casually risk the settlement funds they actually bled for and direct that money into some investment plan they know little about.

The best way to manage the risks present in our line of work is through education and information. We know it is okay to eat a tomato because someone did it thousands of years ago and, rather than dying, they invented the salad. Jeff Gordon knows how to enter a 90-degree turn at speeds in excess of 200 miles per hour but also knows he does not have the education or experience to manage his winnings. He hires experts and tells them to keep his risks to a minimum. In the same light, an injured claimant would be best served by seeking the advice of a Certified Structured Settlement Consultant (like yours truly) for help in designing their settlement plan before they receive the money, while they still qualify for the greatest individual tax break in the Internal Revenue Code.

When I design a periodic payment plan for an injured claimant, I consider all aspects of their situation. Then I demonstrate how this plan can provide the greatest guaranteed benefits available while avoiding federal, state and local income taxes, protecting their settlement from the abundant unforeseen risks lurking along their path.

Want to see how a structured settlement can eliminate the risk and assist you in resolving your next case? Call Frank C. Kilcoyne, CSSC at 800 544 5533. I am here to help.

Read more: http://www.faqs.org/health/topics/15/Risk-taking-behaviors.html#ixzz2VXxkLvpd
NASCAR's Jeff Gordon Unveils No. 24 Car on CNBC” Published: Thursday, 6 Jun 2013 by: Jessica Golden