Guru Speak

Not a day goes by when I don't encounter a friend or colleague who is not stressed about the burdens of life. Of late, I have been even busier in lending an ear to listen to others' problems as news of the economy and global epidemics like the H1N1 flu only seem to intensify people's personal troubles.

How then can we deal with stress in a world permeated with fear, anxiety and endless bad news? My take is since the main factor that causes stress is lack of internal control over external problems, in order to effectively deal with stress one would need to either deal with the "internals" - how one deals with problems - or the "externals", dealing with the problems themselves.

Dealing with the internals may be beyond my expertise, but I believe I know a thing or two about handling the externals through risk management.

Risk management through savings

The rule of thumb is at least 10 per cent of your income should be saved and you should have a cash emergency fund of six months living expenses. Keeping this in mind, you can create your own savings plan to store a reserve fund for the proverbial rainy day, or to plan ahead for future circumstances such as for your own retirement fund or your children's college fund. Risk man¬agement through a managed saving plan provides you with control over your finances, so that you stay on top of your expenses, not vice versa. Besides, many insurance companies in the Thai market provide savings products that allow consumers like you and me to plan for the future by reaping marketrate returns on our savings without being exposed to investment risk.

Risk management through insurance

I like to think of insurance as a small price to pay for peace of mind. In other words it is a guaranteed small loss to prevent a larger one. Moreover, there are two main reasons why people buy insurance: to protect one's assets and to protect one's income. Therefore, any future prospects that may bring about large losses to your assets or income such as injuries, sicknesses and deaths should be covered when possible. Because one cannot plan for unexpect¬ed losses, one should transfer the risk of a loss to a third party - especially if the premium is not beyond your fund¬ing capabilities. Risk management through insurance purchases provides you with control over your future, so you are not taken by surprise emotion¬ally and financially when the unexpect¬ed situation arises.

Take control of your life!

The solution to being in better con¬trol of your life is to prepare for the unexpected by planning for the future. Insurance - be it in the form of planned savings or purchasing insurance - helps mitigate costs of unexpected events which could devastate your finances and thus your life. People who build a road map for their finances in turn also create a road map for their lives. It pays to plan ahead - after all it wasn't rain¬ing when Noah built the ark.

STEPHEN APPLEYARD is president of Ayudhya Allianz CP Life.