Nothing is without risk – from driving to work to having a job at the end of the year. This is due to the unpredictability of life and our negotiation of that with as much foundation as we can have. Yet, risk still needs to be managed – whether in our daily life or, specifically, in terms of things like property.
As the Business Dictionary highlights, risk is:
“A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.”
When it comes to business, the basics remain. “The probability that an actual return on an investment will be lower than the expected return.”
The point is it’s all about probability of something occurring that threatens the intended goal of your actions or behaviour.
Risk also shouldn’t be completely equated with hazard. The Canadian Centre for Occupational Health and Therapy says:
“A hazard is any source of potential damage, harm or adverse health effects on something or someone under certain conditions at work.
Basically, a hazard can cause harm or adverse effects (to individuals as health effects or to organizations as property or equipment losses).”
Thus, when considering major payments for things like a home loan, we need to consider various kinds of risks. For insurers there are concerns many of us might not consider.
“The relative vulnerability of real estate fabric is [a] consideration for insurers. This includes the age of infrastructure. For example, climate-resilient measures, such as water-resistant construction materials, are more often present in new developments than in older structures.
“However, while new buildings may be able to withstand windstorms and tornadoes more effectively, newer structures can be less resilient when it comes to flooding, since far more infrastructure, from heating and electricity systems to computer servers, is now placed underground.”
The risks to property do intersect with risks to people themselves – but of course there are unique aspects to property. Wear-and-tear, proximity to dangerous areas, and so on, all impact property and insurers’ view of property in ways they don’t of people. (We don’t usually talk about people in terms of wear-and-tear, for example.)
When considering what risk means, then, we should maintain these broader perspectives, especially when it comes to property.