Risk management is the process of identifying, analyzing, and prioritizing the various risks to which you are exposed and deciding how to proactively address them. Most of us cannot realistically avoid risks such as driving a car or owning a home. Instead we choose to transfer that risk to insurance companies by purchasing insurance policies. Insurance is only truly valuable when it responds after an unexpected loss. Paying for an insurance policy does not mean every type of loss is covered. Be sure you understand the coverage you are purchasing and ask questions if you do not.
The most common losses people experience involve property and liability. One effective way of keeping your insurance costs down is by mitigating the potential for common losses so you do not have to claim them on your insurance.