...CLASSES OF INSURANCE LIFE INSURANCE This is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual’s or individual’s death. It is the risk pooling plan and economic device through which the risk of premature death is transferred from the individual to a group In return the policy owner or policy payer agrees to pay a stipulated amount called a premium at regular intervals or in lump sums (so-called “paid up” insurance). A life insurance contract is intended to meet the needs of survivors or beneficiaries, when the investor dies. From the life insurance contract, the beneficiaries receive a sum of money that far exceeds the value of the premiums the investor had paid. The beneficiaries, of course, receive this benefit if the person insured dies during the contract period. The contract of life insurance is different from other types of insurance in the following respects. The event insurer against is an eventual certainty i.e. nobody lives forever. It is not the possibility of death that is insured against; rather, it’s the untimely death. The risk is not whether the insured person is going to die but when. The risk increases as the individual ages or grows older because chances of death are greater in later years than in initial years. There is no possibility of partial loss in life as in the case of property and liability insurance. Therefore, if a loss occurs under life...
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...INSURANCE AND RISK 1.0 Definition of insurance. Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Categories of risk include:- 1. Financial risks which means that the risk must have financial measurement. 2. Pure risks which means that the risk must be real and not related to gambling 3. Particular risks which means that these risks are not widespread in their effect, for example such as earthquake risk for the region prone to it. 1.1 Basic Characteristics of insurance. The insurance has the following characteristics which are, generally, observed in case of life, marine, fire and general insurances. 1.Sharing of Risk:- Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of a specified event. The event may be death of a bread-winner to the family in the case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The loss arising nom these events if insured...
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...approaches and methodologies are required to be followed. The following approaches were followed in conducting this term paper. 1.1 Origin of the Report: The report is a partial requirement of the course Risk Management & Insurance (FIN 410). That is why our honorable instructor assigned us to do a term paper on Reliance Insurance Company Limited. The report is conducted based on the financial statement and the website of the company. This report is a reflection of what we have learned in between the course. 1.2 Objective and the Scope of the Report: The report was prepared as a part of our course work. The basic objectives of preparing this report are: * Analyze the financial statement of the insurance company and calculate different ratios. * Different policy the company offers. * Overall structure of the company. 1.3 Methodology of the Report: The term paper was based on different numeric values collected from the financial statement of the company and plotting them in different equations, also some information regarding the company was collected from the company’s website 1.4 Sources of Data: All the data and the information which was required to complete the term paper have been collected from the financial statements and the website of Reliance Insurance Company Ltd. That means, only secondary sources of data was used to complete the term paper, no primary source was used. 1.6 Limitations of the study: Of course this term paper is not flawless and we...
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...FINANCIAL MANAGEMENT Module Run No: R19/3-2011 PROJECT REPORT By: Tengku Mohamad Hedir (Intake: R19/03-2011) In partial fulfillment of the requirement of the HIGHER DIPLOMA IN SUPPLY CHAIN MANAGEMENT NO | TABLE OF CONTENTS | PAGE | 1 | INTRODUCTION | 3 | 2 | OBJECTIVE | 3 | 3 | EXECUTIVE SUMMARY | 4 | 4 | CAUSE OF THE ECONOMIC CRISIS | 5 | 5 | RISK MANAGEMENT | 6 | 6 | VARIOUS FORMS OF RISKS | 7 | 7 | MANAGING RISKS | 9 | 8 | CONCLUSION | 11 | INTRODUCTION This Project Report is based on the topic of “The Global Economic Crisis Challenges Management of Business Risks”. With view to the economic crisis in 2008 up till today, many businesses and major world economies are still reeling from the effects of the global downturn. This is primarily due to the onset of the subprime credit crisis. The subprime crisis is characterized by a rise in mortgage delinquencies and foreclosures backed by housing loans to individuals who face difficulty maintaining the repayment schedule. However, those who turn out better from the crisis have been seemingly those with greater awareness of their risks of doing business and practice more effective management of these risks. OBJECTIVE The objective of this Project Report is to identify the various risks that a business in Singapore needs to be aware of and to manage. EXECUTIVE SUMMARY The importance of risk management cannot be overstated. This is a fundamental part of doing business that...
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...Northern Caribbean University College of Business and Hospitality Management Group Assignment 1 An assignment in Partial Fulfillment of The requirements of the course: FNCE 437: Risk Management and Insurance Presented to: Mr. John McAllister, MBA Prepared by: Mark Jackson – 60100164 Candece Hamilton - 18100252 Television station WMSD is located in a midwestern city of 1,750,000 people. The station is incorporated, with the majority of the stock owned by one family. The grandfather, age 68, who founded the station, has already begun to make gifts of the stock to other family members. His daughter, age 47, is currently the vice president and will manage the station her father retires or dies. The station is affiliated with one of the three national television networks. WMSD has 156 employees. Of these, 20 appear on the air, 7 are managers or officers, and 129 are clerical, production, or marketing employees. The payroll for a recent year amounted to $43,550,000. WMSD’s assets include buildings and a transmission tower valued at $47.5million on the books, but with a replacement value of $62 to $64 million. The station’s equipment, including cameras, videotape machines, six autos, three trucks a leased helicopter, and sophisticated electronic equipment and computers, has a book value of $52.6million and a replacement cost of $73.5 million. In recent years, the station’s earnings after taxes were as: year 1, $58 million; year 2, $65 million; year3 $ 40million...
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...Chapter 1 – Risk What is risk Something that could go wrong or go right Concept based on perspective dependent on personal opinion Underwriter- one who looks and rates policys on whether the insurance comp is going to offer insurance. Risk for underwriter: that’s what they ensure or underwrite * Risk Management Uncertainty concerning loss The difference between expected losses and actual losses Possibility of variation of outcomes from given situation Chance or possibility of a loss Loss exposures: any condition or situation that presents a possibility of loss. Examples picture of store Product liability Slippery floors Case application Michael is a college student majoring in marketing, he owns the following A high mileage 2003 ford that has a current market value of $2500 Retain exposure loss Liability law suit- driving negligent Liability insurance Clothes tv cell phone and other personal prop value at $10,000 Fire caught in kitchen Protection of things- loss reduction, property insuranace Disposable contact value at $200 for a six mo. Supply Disapearanve of contact lense Retain that loss Gets jumped Avoidance Types of risk Pure risk House damaged by fire One family Plant explosion River overflows Speculative risk Invester purchases 100 shares of stock Slot machines Diversified One family Plant explosion Non diversified Department of homeland security alerts a large group River overflows Home buyers are effected by interest rates Risk Management- process, takes multiple...
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...Honeywell, Inc. and Integrated Risk Management Case Analysis Submitted to: Prof. A. Kanagaraj By Vivek Gupta Section C, 944 Executive Summary: Honeywell was a multibillion-dollar, International Corporation employing 53000 people and managing operations in 95 countries. It was the largest producer of control systems and products used to regulate heating and air conditioning in commercial buildings and of systems in avionics systems. Carrying out business in 95 countries firm faced a number of risks. Honeywell’s risk management activities were dispersed throughout the firm as shown in the table. Other risks were managed operationally. [pic] The committee voting for this new program depends on whether the anticipated savings of the program would be realized, and whether the coverage provided by the new contract would be adequate. The proposed plan is a first step in a firm wide integrated risk management program that would extend to cover all of Honeywell’s financial and operational risks, the finance committee’s decision would establish Honeywell’s risk management strategy for some years to come. Honeywell’s existing strategy was consistent with its risk management objective of minimizing earnings volatility and its cost of risk. The team wondered about the applicability of the relatively new concept of enterprise risk management, which is grouping many risks together into a portfolio of risks, rather than managing each risk separately. The team thought...
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...Risk and Insurance in International Trade AMB 302 ACeL Amity University Risk refers to a situation where outcome are uncertain. In other words risk occurs whenever there is a variation in the actual outcome and expected value. In Business if there is a variation between the actual and the expected value, business suffers a loss, therefore the term risk is also used to describe the expected losses or the variation from the actual outcome. Course Objectives: The course aims at making the students conversant with risk of cross border business (Trade, Investments and Long Term Projects) and the techniques available for mitigating those risks. The role of Insurers and the products and services offered by them would be gone in detail to equip the students with decisions making tools. Learning Outcomes: At the end of the course, the student will be able to: understand the concept of risk in business management learn various techniques available to assess and mitigate those risks develop strategic alternatives evaluate different kinds of risks and their impact on different areas Table of Contents Course Objectives: ........................................................................................................................................ 2 Learning Outcomes: ...................................................................................................................................... 2 Chapter 1: Concept of Risk ................................
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...Introduction to Risk Management and Insurance, 10e (Dorfman/Cather) Chapter 1 Introduction to Enterprise Risk Management and Insurance 1) A Pure Risk is defined as: A) an event that offer no opportunity for financial gain B) the chance a loss will occur C) a diversifiable risk D) a contingency that increases the chance of a loss Answer: A Diff: 1 2) All the following are direct losses except: A) a car is stolen B) a house suffers flood damage C) an apartment must be rented after a house is destroyed by fire D) a business loses $100,000 in a law suit Answer: C Diff: 1 3) All the following are direct losses except: A) a house is burglarized B) a store loses $200,000 in sales because a fire closes it down for two weeks C) a corporation must pay $1 million in ransom when its CEO is kidnapped D) an delivery truck needs $15,000 in repairs after a collision Answer: B Diff: 1 4) Which of the following is not an example of a Catastrophic Loss Event? A) Hurricane Katrina B) Death of Michael Jackson C) September 11, 2001 terror attacks D) 2004 Tsunami in the Indian Ocean Answer: B Diff: 1 5) Which of the following is not a method of protection of risk? A) Group insurance plans B) Employee benefits C) Social insurance D) Humanitarian aid Answer: D Diff: 2 6) Defective electrical wiring that may lead to a fire is an example of a: A) pure risk B) non-diversifiable risk C) speculative risk D) physical hazard Answer: D Diff: 2 7) Risk Pooling...
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...You Decide Week 6 Little Falls Hospital Risk Management HSM 542 Health Rights and Responsibilities Purpose A risk management plan is created so as to support Little Falls Hospitals mission and vision statements as it pertains to the clinical risk of the hospital, patients, visitors, volunteers, and employee safety, and any possible operational, business, and property risks. Culture Principles The Patient Safety and Risk Management program will support Little Falls Hospitals philosophy; everyone is responsible for patient safety and risk management. It is essential to have participation and teamwork among providers, management, staff and volunteers. The Patient Safety and Risk Management program will be implemented with the coordination of multiple organizational and department functions and activities. Little Falls Hospital will support the introduction of a just culture with emphasis on evidence based best practices, learning from errors, and providing feedback instead of punishment and blame. In a just culture any unsafe conditions or hazards will be identified quickly, medical or patient care errors will be reported and analysed, open discussions of mistakes and suggestions for improvements are welcome with patient safety and risk management practices. Individuals will still be held accountable for compliance. When evaluation and investigation into errors reveals there has been reckless behaviour or there has been wilful violation of policies then disciplinary...
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...Operational/hazard risks insurance type of risk * Focus on physical damage to property * 3rd party liability * Business interruption * Well control * Bring the well under control and re-drilling the original well * Directors & officers liability * Crime * Bonds – post security * Automobile * Ransom Most important risk * Employees how to obtain these employees and retain them (highly educated) Reserve replacement * You don’t have adequate replacements for your reserves * Assets and other physical property * Have to constantly buy land, look for opportunity in the world What in the company makes you competitive to your peers? Largest risk is in UK buzzard, produces about 40% of oil * If Nexen loses this rig, they would lose $5 billion, if lost, will threaten existence of company Political & social risk Protection of people, and property (in foreign lands) Foreign exchange * Always volatile * Tax rates Project risks * Budget, staffing, time, access to materials Environmental risk * One of most difficult things to predict * Hard to know what’s right and what’s true Risk Management @ Nexen * Not involved in credit risk, employee risk * Have other people looking at it * Involved in risk identification and management * Not just a risk group but and insurance group * Existing risk as well as new risks * Look for contractual language to come up...
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...Finance 341 Risk Management and Insurance Fall 2014 - Niehaus Overview This is a foundational course that focuses on the economics of risk, decision making under uncertainty (including behavioral biases), methods for managing risk, markets for transferring risk (e.g., insurance markets and derivative markets), and public policy issues related to risk. Specific topics include risk measurement, diversification, moral hazard, adverse selection, insurance pricing, the role of capital in ensuring performance, biases affecting decisions, safety regulation, longevity risk, systemic risk, natural catastrophe risk, and cyber risk. In addition to learning about risk, the course is designed to improve your analytical thinking and problem solving skills. Class Tuesday: 4:25-5:40 Thursday: 4:25-5:40 Office Hours: Room 457H Tuesday: 2:30-4:00 Thursday: 2:30-4:00 Or stop by my office Or make an appointment Expectations I expect students to spend a considerable amount of time outside of class reading the required materials, working on problems, and studying for exams. Expect to spend 6-9 hours outside of class each week. My strong recommendation is not to get behind. If you have questions, do not hesitate to ask either in class, outside of class, or in question and answer sessions which typically are held on Friday afternoons. Grading Homework (problems and writing assignments) 20% 1st exam (Sept. 18) 20% 2nd exam (Oct. 28)...
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...as aid management in the development of budgets and goals (McCarthy & Flynn, 2004, p. 265). It is also their responsibility to analyze and manage risks the company may encounter. To perform these tasks controllers and company financial officers establish internal controls. A system of internal controls ensures preparation reliable financial statements, compliance with financial regulations, reduce risks, and identify and achieve short and long-term goals. Management uses internal controls to adapt to economic changes (AICPA, 2011, p. 2). Insurance and portfolio theory are approaches to managing and analyzing risk and play an important part in an internal control system. Internal Control Systems An internal control system is composed of five inter-related components, 1) Control Environment, 2) Risk Assessment, 3) Control Activities, 4) Information and Communication, and 5) Monitoring. The control environment is the company’s fundamental values and directives, risk assessment is the identification and analysis of possible material misstatements, control activities are the policies and procedures used to identify and manage risks, information and communication involves the processing and distribution of information needed to meet company objectives, and monitoring “assesses the quality of the system’s performance over time.” (AICPA, 2011, p. 6). The components are important to developing a framework of internal controls that, although not a guarantee, assist management in achieving...
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...construction is the a major and any productivity enhancement activity in this sector will have a positive impact in overall improvement of the national economy. The Nepalese construction industry is still regarded as in infant stage, can play a vital role to uplift the economic and socio status of local people by developing such infrastructures. In addition there are many risks faced by the construction industry in order to achieve its aim. 1.2. Objective of the study The major objective of this report writing is to understand various risk faced by an industry or an organizations and their ways and techniques to handle all these risk. But apart from that the other objectives of this study are: 1. To understand different types of risk facing organization. 2. To understand the trend of risk analysis in Nepalese construction market. 3. To know the techniques used to manage loss exposure unit 4. To find out the problem faced while managing risk 5. To know what methods are usually followed to reduce risks in construction companies? 6. To know benefits and significance of risk management 1.3. Research methodology There are many methods of collecting data. For the purpose of preparation of this report, direct interviews with respondents were taken and questionnaires were prepared. However secondary sources of data like annual general report and other journals...
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...must mitigate risk to achieve maximum profitability. Mitigating the risk can be accomplished by implementing controls. While insurance and portfolio approaches are important control strategies, they are only single components of an overall risk management plan. Implementing an internal control system will assist management in monitoring and deterring risk. Current Controls The current approaches of insurance and portfolio are valid controls. One way to mitigate risk is to transfer some of the risk to a third party. The third party willingly accepts the risk for a fee or premium. This approach is called insurance. However, this approach is limited and considered reactive as it does nothing to deter harm to company assets. In addition, there are only certain risks that insurance companies are willing to take on and others that simply cannot be insured (McCarthy & Flynn, 2004). With the portfolio approach, all departments are treated as one unit so that interrelated risks can be identified and put “in the context of all the other risks and the company’s business strategy” (McCarthy & Flynn, 2004, pg. 255). However, it does little to deter risk. Internal Control System An internal control system is an ongoing process that ensures compliance with laws and regulations, reliable financial reporting and efficient and effective operations of an organization. According to Ratcliffe and Landes (2009), “an effective system of internal control enables management to deal with...
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