(Un)Calculated Risk

(Un)Calculated Risk
Yesterday’s blog mentioned risk and suggested putting line items in for several types of risk. In speaking to Mitch Creekmore, The Latin American supervisor for Stewart Title, yesterday the thought of “catastrophe risk” came to mind. Mexico of course is bearing the brunt of the swine flu disaster so far. Many companies have eliminated all international travel. How many other markets will suffer from the swine flu?
Will this flue pandemic be a short lived and limited economic problem; or will it linger and poison an already slow recovery? How far from the tree will the fruits of this situation fall? Mexico is already suffering from low oil prices and reduced remittances. The 3rd leg of the 3 legged stool, tourism, seems to be cut off as well. What kind of factor would one put in investment projections to anticipate an event like this?
As the world becomes smaller and more integrated the possibilities for this type of event are increasing. Not just developing countries are affected. SARS hit several highly developed Asian Countries. Think what mad-cow disease did to the beef industry in Britain and the USA. Should we start another line-item in the risk portion of our cash flow models?
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com