Risk and how to manage them

Many people think of risk as "something can go wrong". Actually, risk is defined as variation from the expected.

Everyone has to die one day, so this is expected and is not a risk. The risk is that one may die at a young age, and have dependents that cannot support themselves.

As we grow older, we expect to be sick more often and to incur higher medical bills. This is not a risk,  as it is expected. The risk is that the medical bills may be too high and beyond our means.

This risk can be managed by making better decisions. The medical specialists have a vested interest to get the patient to spend a lot of money on treatment, even if the chance of recovery is slim. There could be better ways of dealing with the illness that is not so costly.

Buying expensive medical insurance is not really a good way to deal with this risk, as the insured may be misled into taking expensive treatment that is not effective, and may have to bear a significant portion of the bill through the co-payments.

Many health care risks can be managed through having adequate savings, and making an informed decision on how to choose the right doctors and treatment. For most people, it is better to go to subsidized wards, as the risk of given expensive, unnecessary treatment, is minimised. The high cost can be covered by basic Medishield. This will allow us to avoid the situation in America where health care takes up 16% of the GDP.

Tan Kin Lian