Personal capability: the alternative to nationalising risk

This thinkpiece in conjunction with the CII takes a timely look at factors shaping the public s ability to take financial risk decisions, and argues that the very government regulation that is supposed to protect consumers might actually be quietly harming their ability to assess risk.

  • The global financial crisis has exposed the UK s level of risk and the fact that much risk has effectively been transferred to a local and personal level.
  • Although personal risk is relatively low compared to the past, climate change and terrorism have increased global risk while increased life expectancy impacts lifestyle risk. People are exposed much more directly than ever before to financial risk.
  • Despite this, the public s attitudes towards financial risk, and its ability to assess it, has become eroded as the government has sought to shroud consumers from risk through higher levels of financial regulation.
  • There is a danger that this has made people less financially capable and more dependent on the state.
  • There is an opportunity for the industry to develop and help people build the capability and receive the information that they need to properly manage the risks they face. The development of the internet provides an ideal and easily exploitable method for the industry to provide this information to consumers.