Risk management
Risk management

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Risk management

3 Risk in everyday life

Risk is all around us. We take risks when we eat and drink, travel, enjoy hobbies, invest money and do many other things. Risk may be something you think about a lot when doing any of these things, or it may be something that never enters your mind. Take a look at the activity below and try to describe your approach to risk in these areas.

Activity 1 Considering risks in everyday life

Timing: Allow approximately 10 minutes
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Hopefully you will have taken the opportunity to think about your and others’ personal approach to risk, known as personal risk appetite, and appreciate how people can have different approaches to risk in different parts of their lives. For example, someone who skydives and likes travelling solo around the world may not like a lot of risk in their financial investments. But it is also true that some people are big risk-takers most of the time, and take a lot of risks generally, while some are risk-averse and avoid taking risks as much as possible.

Getting the balance right between when and how much risk to take can often be tricky. Taking too many risks, or one really big risk in a personal hobby may mean we get injured. In personal investments, taking more risks could be a good way to earn more money, but it is also a good way to lose money – balance is the key. In pensions, for example, young people are often encouraged to take slightly more risk in their investments, but people closer to retirement are advised to be risk-averse and take as little risk as possible.

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