Risk Management Level 3 Assignment 3
MFL is the largest financial hit that can be experienced by a policyholder when there is harm or destruction of an insured property by an event such as fire. There is an assumption of a malfunction and non-response of the safeguards put in place. There is EML which is an estimate from experience, and there is no specific formula for the determination of the amount. Lastly, there is also the NLE which is the amount of loss expected to be incurred by insurance in normal conditions.
Risk control is the method used by firms for the evaluation of potential losses and then take appropriate measures to minimize or eliminate the said threats (Types of Risks, 2012). Loss control, on the other hand, entails the identification of risk sources and there is involvement of voluntary or necessary actions for the reduction of risks. The objectives of risk control are to identify potential risk factors in the operation of an organization that might impact its well-being.
An accident can be defined as an unplanned event whereby the action or reaction of an object, person or substance lead to the injury of an individual or probability of thereof. Some of the principal causes of accidents in the workplace include fatigue, stress, slips, hazardous materials, collisions, and trips.
The implementation of a strategy for the minimization of liability can be done through a comprehensive liability safeguard program. This included a transfer of risks by managing suppliers, management of supplies and imported components, building safety into designs, keeping of essential records and enabling and reviewing customer feedback.
Risk Management Level 3 Assignment 4
Fire risk control application can be instituted through four steps. First, there need for the identification of fire hazards in the workplace. The second step entails the assessment of risks that are posed by the hazards identified in step one. The third step entails putting measures in place to control the said risks, and the fourth step is all about monitoring the hazards and reviewing controls.
Natural perils are perils that cause loss and people have minimal control over them. These natural perils include rain, wind, earthquake, hurricane or floods among many others.
Consequential loss can be described as the amount of loss that a business can incur due to its inability to utilize its business property. In determining consequential loss of business interruption, a business considers loses that are incurred indirectly as a result of damage to physical property. It can also be from the inability of a business to function due to physical damage that directly implicates on the business.
There are some risk-control measures that a company can implement to deal with risks concerning suppliers. First, there is an assessment of risk landscape to establish the possibility and implication of a risk event from suppliers. Secondly, there is the deployment of comprehensive supplier review of the existing suppliers in addition to a verification process to assess new suppliers. Thirdly, need for the deployment of risk metrics which entails creating key risk indicators that can help in alerting in case of issue in the supply chain. Fourthly, there is the need for reporting risks internally which involves setting up a process for monitoring risks in the supply chain. Five, there is the need for the company to continuously improve by risk monitoring and governing so that gaps in supply systems can be closed.
Risk Management Level 3 Assignment 5
Firms use risk management technique to deal prevent loss or increase profits. There are three major techniques used in the management of risk factors and include loss control, internal risk reduction and loss financial. Through these, a company can be protected, and there are possible management and containment of risks. Loss financing is a technique used in obtaining funds for making payments to offset losses incurred by the company. The main strategies for loss financing include retention and self-insurance, hedging, insurance and various contractual risk transfers. Retention entails the when the business or individual pays for the loss incurred. There is insurance which entails when the payment is made toward a certain loss and thereby reducing the risk to the buyer. Hedging entails the used of various payment derivatives to offset various losses resulting from a variation in interest rates. This form of loss financing is mostly used by larger companies while smaller businesses use contractual risk transfers. The use of contractual risk transfer is taking a risk and consequently transferring the risk to another entity.
According to this risk management model, risk management begins with the event identification. This means that for the minimization of risk exposure, an organization needs to start with a comprehensive list of potential risks. The diagram shows a broad framework for the identification of risks and listing potential risks and detail potential risks to an organization (Berg, 2010).
Risk Management Level 3 Assignment 6
A captive insurance captive that us properly structured and managed can provide some benefits. Some of the benefits include benefits from secured loans from captive businesses to the company in operation. Another benefit for the captive insurance company is risk funding. Businesses that work in the construction, healthcare and manufacturing and others can have coverages with the captive insurance company that could, however, be very expensive when using commercial insurance company. Some of the policies under captive insurance company entail the coverage for legal expense reimbursement, pollution liability, cyber-attacks, and equipment failure among others. There are tax benefits under captive insurance in which it has been proven to be an appropriate strategy for the improvement of cash flow for businesses and especially through at the mid-market level.
Speculative risks can be defined as the category of risk that lead to an uncertain extent of gain or loss when undertaken. These risks are made through conscious choices and are not just due to uncontrollable situations. The speculative risks are usually the opposite of the pure risk. Under the traditional insurance market, speculative risks cannot be insured since the rule of potential rewards cause individuals to take risks willingly. The possibility of gaining is a moral hazard that leads to people seeking risks instead of avoiding them.
For an insurer, individual risk rating is carried out to price more accurately the coverage written that if the rate were established on manual rates. There exist two types of individual risk rating systems namely the prospective and retrospective systems (Fisher et al., 2017). The prospective system entails the utilization of experience in the determination of future costs. Retrospective system on the hand entails the utilization of experience of a specific period for the establishment of the final costs of the period.
Risk Management Level 3 Assignment 7
Legal liability can be described as the lawful accountability and obligations need because of civil actions or torts or even in terms of a contract. Despite the fact that by mutual agreement, the settlement is carried out outside the court, it is only decision that instituted by a court that can set this obligation even (Legal and Liability, 2012). It is important to note that liability insurance only covers liability arising from torts, but contractual obligations lack bearing. A risk manager would need to know that there are many means by which legal liability may ensue. Legal liability entails the legal bound obligation for an entity to pay debts. The risk manager should, therefore, understand legal liability arises from the situation where an entity is financially and legally responsible. Legal liability entails both the civil law and criminal law. There are various areas of law under which liability can arise, and they include contracts, taxes, fines, tort judgment or settlements among others. Liabilities arising from negligent torts can be insured and not liabilities from intentional wrongs or contract breaches.
Liability crisis can be described as the situation caused by insurers charging inadequate premiums in the preceding years in addition to an increase in the cost of personal injury claims. There has been liability crisis in various areas, and there have been initiatives by the Commonwealth government whose function is to predict future losses and formulate stable Public Liability insurance (McDonald et al., nd). Liability risk, on the other hand, entails the threat of a firm or individual who has to bear the consequences of damage or breaching standards as a result of negligence, actions, product or operations.
Berg, H. (2010). Risk Management: Procedures, Methods and Experiences. Ww.gnedenko-forum.org. Retrieved 27 November 2017, from http://ww.gnedenko-forum.org/Journal/2010/022010/RTA_2_2010-09.pdf
Fisher, G., McTaggart, L., Petker, J., & Pettingell, R. (2017). Individual Risk Taking. Casact.org. Retrieved 27 November 2017, from http://www.casact.org/library/studynotes/Fisher_Individual_Risk_Rating_Study_Note_2017.pdf
Legal and Liability Issues th at Should be Considered In a Business Plan. (2012). Agrisk.tamu.edu. Retrieved 27 November 2017, from http://agrisk.tamu.edu/files/2012/07/G.-Legal-and-Liability-Planning.pdf
McDonald, T. The Public Liability Crisis: Why did it occur and how has it been resolved?. Core.ac.uk. Retrieved 27 November 2017, from https://core.ac.uk/download/pdf/6319782.pdf
Types of RisksRisk Exposures. (2012). 2012books.lardbucket.org. Retrieved 27 November 2017, from https://2012books.lardbucket.org/books/enterprise-and-individual-risk-management/s05-04-types-of-risks-risk-exposures.html
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