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Since we are way too confident that bad things won't happen to us I have been researching how to prepare for several rare events with disastrous consequences. Starting the research I realised I have yet to find out what those events exactly are. So far I have found these, remedy given if known:
Some of these are more economic in nature, some take a massive psychological toll. To deal with an event means to either reduce its possibility or to reduce its impact. Insurance helps with the latter, psychological preparation further takes the edge off. Reducing the possibility can be through more expenses e.g. higher quality items or through change in behaviour.
This project is very much a work in progress. Should I complete or abandon it I will share the state I leave it in. Please post all your thoughts and relevant material. I am especially interested in some numbers such as probabilities of these things happening (like the oft-stated number of 50% divorce rate).
I believe that some foreign large-scale catastrophes could also negatively impact one’s well-being. Extreme example: imagine if everyone in the world suddenly died except the citizens of your country. Psychological toll aside, your country’s necessary transition from international trader to autarky would be painful. Losing trading partners = losing ability to specialize = reducing economic efficiency = falling wages.
The reinsurance ma... (read more)