Each year around this time I think back to the day of my college graduation. As a final send-off, after the ceremonies, the school held a luncheon for the graduating class. At this luncheon I happened to be seated next to a well known alumnus of the school. This fellow had graduated in the 1950s and was the retired CEO of a prominent public company. For that reason, as an eager 22-year-old, I was listening closely to everything he had to say.

Little did I know, however — and little did he know, unfortunately — that while we were enjoying this nice lunch, the man was in the process of being defrauded by his personal assistant. I later read in the newspaper that, over the course of several years, his assistant stole from him more than nine million dollars, spending it on fancy cars, trips to Las Vegas and a beachfront home in Miami. Needless to say, this fraud left him in a difficult financial situation.

I share this unfortunate story because it tells us something important about the nature of financial risk, which is that it comes in more shapes and sizes that we normally expect. Consider the following:

• A few years back, Kim Richards, one of the stars of the “Real Housewives of Beverly Hills” found herself the defendant in a lawsuit after her dog viciously attacked a friend in her home.
• More recently, a group of prominent Americans, including Michael Dell, fell victim to a Ponzi scheme. In this case, the schemer had promised to earn big profits by cornering the market on tickets to the musical Hamilton. In the end, there were no tickets; it was just a scam.
• Sometimes the damage is self-inflicted. During his presidency, Teddy Roosevelt was blinded in one eye when he challenged a military aide to a boxing match.

I mention all of this because, in my view, the financial industry often approaches risk with a view that is too narrow, focusing only on risks within a client’s investment portfolio. To be sure, investment risk is important, but I believe that is just part of the puzzle. I would recommend a more comprehensive approach to risk.

What does this look like in practice? The answer is that I would recommend a process of risk-assessment tailored to your own unique circumstances. Below are a few examples:

For working people, the most important objective is to protect your source of income by way of disability and life insurance. Beyond that, you should consider other potential areas of risk. If you have a pool or a trampoline — or a big dog — you should make sure you have substantial amounts of umbrella insurance. And, if you have substantial wealth, you might explore trust structures to protect your assets — from potential lawsuits, from elder care costs and from estate taxes.

Ultimately, my definition of risk is very simple: it is anything that could prevent you from achieving all of your financial goals.

By definition, it is impossible to predict what is unknown. But, a reasonable dose of vigilance and some thoughtful preparation can go a long way toward ensuring that you reach your goals, and sleep well at night.