Managing Risk Part 1 – Managing Risk as a Prepper

There is no such thing as a risk-free life. We all face risks. Some of them are universal in that they impact all people. Others may be more specific to our circumstances. But we all deal with risks (some better than others) and we all have tools and skills to address risks (again, some better than others). How you evaluate risk as a prepper will really determine if you’re wasting time and money.

In a way, your success in life will be determined by how you manage risk. To gain in the stock market, you have to risk your equity. To gain love, you have to risk your heart. If you want to have the joys of children, then you have to risk every day letting them grow up.

It should come as no surprise that a big part of being prepared is assessing and reacting to risks. Some examples of risks that we prepare for:

• The risk that we die. We’re going to die. Today, tomorrow, next year, quietly in our sleep at 95… It’s not really a risk, it’s a certainty. The only variable is WHEN. So we mitigate that risk through life insurance, writing a will, finding Jesus, and seizing the day. We also do what we can to avoid an untimely death. Eating right, exercising, not smoking, etc.
• The risk that we have a car wreck. We buy insurance, we buckle our seat-belts, we more or less follow the traffic laws.
• The risk that we lose our jobs or otherwise suffer a financial hardship. We save money. We might develop a backup source of income.

My point is that most of us have a pretty good idea of things that might or might not be risky, and the idea that we can control the likelihood and/or the severity of those risks impacting us.

Preppingmill Takes a Risk-Based Approach to Preparing

Someday, I hope to be about 80% prepared for the things that I think are likely to have a significant impact on me. Seriously. 80%. Why not 100%? Economics. For me to be 100% prepared for every thing that might happen, I’d need billions of dollars and I’d have to live to be 395 years old.

I’m busy living my damned life. I don’t have to do ALL of this. Not right now. Not all at once. I have to work it in with my other priorities. Being a good human. Loving my wife. Raising decent kids. Making house payments. You know, life. My life is not all about being a prepper. It’s PART of my life, and I may or may not prioritize it higher than you do. But like you, I have to choose how I spend my money. And more importantly, my time.

My goal is to maximize the benefit of my investments in time and money. If I had more time and more money, this maximization would be less important. I could just run around blowing money and tinkering in the garage until the cows come home. Fill up the attic with a hydroponic garden. Fill up the pantry with canned food. Fill up my back yard with bunkers, cows, and chickens.

My wife won’t let me do any of that, so instead I have to be thoughtful about how I prepare for the bad things. I use some pretty basic, but pretty powerful risk management tools to add this thoughtfulness to my preparation, and I’m going to share these tools with you.

I want to give you a crash-course in risk management, and then take you through a risk management exercise to help you identify the bad things that can happen. After that, we’ll develop plans to deal with these risks.

The awesome thing about the Preppermill Risk Management Approach is that it’s also a great Your Life Risk Management Approach. The thought processes around preparing for hurricanes is not much different than the thought processes around your investment decisions, your life insurance, etc.

The Preppermill Risk Management Approach

Without further ado, this is what we do:

• Step 1: List the bad things that might happen.
• Step 2: Assess the likelihood that these bad things will happen.
• Step 3: Assess the impact if these bad things happen.
• Step 4: Assess the cost to adequately prepare.
• Step 5: Develop plans to address the risks based on cost and priority.
• Step 6: Put this plan into motion and follow through.

Step 1: What’s the Worst That Can Happen?

Step 1 in our risk management approach is to list the things we’re worried about. I know, I like to say that I never worry, but here is one exception. It is useful to worry SOLELY in order to identify the things that worry us. I performed this exercise a few years ago, and most of the things I was worried about are captured in this post about how prepping isn’t weird. Here is a good starter list….

Now, this is my list. It does not include attacks by extraterrestrials, zombie apocalypse, the ACTUAL (Jesus) apocalypse, nanotechnological goo, the Rise of Skynet, etc. My reasons are my reasons but it’s mainly about how likely I think these things are (REMEMBER: Your resource are limited) AND how much I can impact the outcome.

You may have different items that you want to add to your list. Or you may organize things differently. That’s fine. But the first step is just making a list of what might happen. I also added what I consider to be likely causes. This will come in handy for Step 2, when we talk about the likelihood of selected emergencies.

Featured Image: Basile Morin, CC BY-SA 4.0, via Wikimedia Commons