“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” -Mark Twain
Welcome to the 170th Cavalcade of Risk! We’re honored to be hosting again. The Cavalcade is a collection of risk-related posts from around the web, and we have several good ones for you this week. We’re also adding in some risk-themed quotes from famous folks and a couple of risky pictures. Although we often use our own photos in our posts, that is not us down there tossing a baby over a crevice, just in case you were wondering.
Jason Shafrin, who writes The Healthcare Economist, tells us that malaria has returned to Greece. The economic woes in Greece have been in the news for quite some time now, but the effect of an economic meltdown goes far beyond stock portfolios and bank balances. It can also pose a risk to a population’s overall health, and we’re seeing that in Greece with a rise in the incidence of malaria (including 12 cases that were acquired in Greece rather than brought in by travelers) and HIV. I spent two years as a Peace Corps Volunteer in East Africa, and I witnessed the link between poverty and poor health constantly. The health concerns in Greece are a reminder that “wealthy” countries cannot be complacent with regards to healthcare. In happier news, a very big congratulations to Jason and his wife on the arrival of their baby daughter last month!
“And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.” -Anais Nin
Russell Hutchinson, writing at Chatswood Consulting, gives us his perspective on a troubling story about a terminally ill woman who is battling her life insurance carrier over a “material misrepresentation” on her application: She was sexually abused when she was ten, and was treated with anti-depressants when she was 14. That was nearly half a century ago, and yet when her life insurance carrier found out about it, they determined that she should have checked “yes” on the question about whether she had ever been treated for a mental illness or depression. Russell gives a very professional run-down in his post, including discussing the difference between an official diagnosis and a note scribbled by a doctor in a patient file. We have come across this problem numerous times over the years with our health insurance clients, and it’s not something that has an easy answer – the perspective is likely to be very different depending on whether you’re talking to the insured or to the insurance carrier.
“Only those who will risk going too far can possibly find out how far one can go.” – T.S. Eliot
Jaan Sidorov, of Disease Management Care Blog, writes in his usual thoughtful style about “reasonable and necessary” when it comes to Medicare coverage – and how the debates surrounding that issue at CMS eventually impact all of us, not just people on Medicare. The determination of what gets covered by Medicare is complicated and can rely on data that is difficult to collect and interpret. And since private health insurance carriers generally take their cues from Medicare when it comes to determining whether a treatment is “reasonable and necessary,” the decisions that CMS makes have far-reaching implications.
“A ship in a harbor is safe, but that’s not why ships are built.” - William Shedd, Benazir Bhutto, or Grace Hopper (sometimes it’s hard to pin down the source of a quote!)
Hank Stern, the voice behind InsureBlog, tells us about business interruption coverage – very timely in the wake of Sandy. When we think of business insurance, we tend to picture coverage to rebuild a business in the event of a fire or flood or theft. But what if a natural disaster shuts your business down for a while or causes the evacuation of your clientele? Your business might bring in little or no money during that time, but you still have bills to pay and business expenses to cover. That’s where business interruption insurance comes in, and Hank’s post is a good reminder for business owners who would be in a financial pickle if their business were disrupted for any length of time.
“You can never cross the ocean unless you have the courage to lose sight of the shore.” – Christopher Columbus
Super Saver, who writes My Wealth Builder, brings us an article about how part-time work is the new reality for a lot of employees. Limiting employees to under 30 hours a week (or in some cases, as few as 12 – 15 hours a week) gives employers more flexibility in scheduling based on seasonal demand, and also allows employers to avoid having to provide health insurance for their workers (the ACA requirement that employers with over 50 employees must provide health insurance applies to employees who work 30 hours a week or more). Of course, while the shift to part-time might be good for employees who are specifically looking for part-time work (like students, for example), and might a short-term financial benefit for employers, it’s not good for employees who need a full-time income and benefits. And I would argue that it’s also not good for most employers from a long-term perspective, since attracting and retaining quality employees requires a more long-range view than simply cutting costs wherever possible and cycling through an ever-changing employee roster.
“There can be no great accomplishment without risk” – Neil Armstrong
Michael from Financial Ramblings tells why you should rebalance your portfolio. Most investors know that they need to rebalance their portfolios on a regular basis. Of course “regular basis” varies considerably from one person to another, and I’m sure there are more than a few people who haven’t rebalanced anything since they selected an asset mix on their 401k enrollment sheet in the late 90s. But assuming you do rebalance periodically, Michael explains the logic behind doing so. And he also gets into the problems inherent in the idea that you should “let your winners run”: If you end up more heavily balance towards stocks, you may indeed be “winning” in terms of higher returns, but you’re also taking on more risk. If that’s the allocation that works for you, why did you not have it set up that way in the first place? Michael’s perspective basically takes the emotion out of it and creates rules that rely solely on logic, math, and rules – which is really the best way to go about investing anyway.
“Risk comes from not knowing what you‘re doing.” -Warren Buffett
That does it for this edition – thanks for joining us! The next edition of the Cavalcade will be hosted by Emily Holbrook at the Risk Management Monitor.