...its objectives cost-effectively. 5 Step Sequence in RM Process Identify & analyzing exposures to accidental and business losses that might interfere with organization’s basic objectives. Examine feasible alternative risk management techniques to deal with exposures. Selecting the apparently best risk management techniques. Implement the chosen risk management techniques. Monitor results of chosen techniques to ensure the risk management program remains effective. Risk Management Process of making & implementing decisions that will minimize adverse effects of accidental & business losses. Broad View of Risk Management Casualty Risks - hazard risks or accidents Liquidity Risks - Insufficient cash or other liquid assets Market Risks - not being able to buy or sell goods or services the organization needs or provides in normal markets and usual terms and prices. Political Risks - Adverse actions of governments that might expropriate or excessively restrict or tax an organization’s assets and activities. Technological Risks - Failure to keep pace with changes in production or in operating techniques. Risk Manager’s Fundamental Concern (say some) Is the organization’s overall capacity to cope with losses, regardless of whether those losses stem from fires, lawsuits, or poor business decisions in managing speculative risks. Comprehensive risk management should manage both types...
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...Management is the systematic method of identifying, measuring and treating exposures to property and casualty loss. Risk management focuses on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death, and lawsuits). Purpose – To develop pre-emptive strategies to prevent or reduce losses and loss effects; and to develop strategies to reduce the effects of a loss after it happens (Business Continuity Planning); reduce surprises after the loss. Risk Management is a discipline for dealing with the possibility that some future event will cause harm. It provides strategies, techniques, and an approach to recognizing and confronting most threats faced by an organization in fulfilling its mission. Risk management may be as uncomplicated as asking and answering three basic questions: What can go wrong? What will we do (both to prevent the harm from occurring and in the aftermath of an incident)? If something happens, how will we pay for it? Importance -To protect the assets and financial resources of your agency so that you can continue to service clients and the community. It will help ensure the survival of the agency after a severe loss. Essential Components of The Risk Management Plan: • • • • Identify Sources of risk exposure Evaluate or analyze risk exposure (measure the cost of the risk to the organization) Treatment of risk exposure Monitor the plan Sources of Risk Exposure: • Property: Loss of real, personal, owned, leased, rented or owned by...
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...Traditional Litigation: Encountering Risks and Reducing Exposure When dealing with traditional litigation, a business or organization will risk scrutiny of the company’s image or brand, and clearly suffers monetary costs, which can affect the entity’s bottom line. Reflecting on the traditional litigation system, dependent on the type of trial, for example, a civil trial, the burden of proof is rested upon the plaintiff. The plaintiff must present truthful evidence or proof to a judge or jury against the defendant. Thus, the strength of the plaintiff’s credible facts and truth must be supportive of the plaintiff’s claim and proven stronger than the defendant’s defense. Considering the requirements to support a case (plaintiff or defendant), research and costs will rise. The initial course of the discovery process is a difficult factor in itself and has several disadvantages for each party involved. It is expensive, time consuming, and for the most part, a burden in effort to gather relevant evidence to make or strengthen the plaintiff and/or prosecutors case. On the other hand, for the defendant, the discovery process could reveal implicating evidence causing a weak defense or no defense by any means. As an advantage however, both parties, through the discovery process, are given the opportunity to civilly research, view, and gather relevant evidence and information related to the case, which supplies an advantage for each or either party to identify the strengths and weaknesses...
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...Legal Underpinning of Business Law Gregory Wright BUS 670 Legal Environment Andrew Stave Monday April 15, 2013 In this paper I will discuss business structure and organization and how liability differs between each organizational form. My business Tinker’s Home Security Service is being sued by one of my clients for breach of contract. The lawsuit derives from the fact that one of our clients’ property was burglarized and they are stating that we failed to dispatch authorities to their property after the alarm had been triggered. There are different ramifications depending upon how I chose to structure this business and in the next section I will briefly discuss each of them. The various forms of organization are established by state law. There are a wide variety of business organizations recognized by the states. For example, a popular form of organization is the Limited Liability Company (LLC). The LLC is a state designation. At the federal level, an LLC is considered a partnership. If the LLC so chooses, it can be request to be considered as a corporation at the federal level. There a total of six forms of business organizations; Sole proprietors are unincorporated businesses. They are also called independent contractors, consultants, or freelancers. There are no forms you need...
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...broad applicability, risk management processes are commonly applied by organizations or groups and so, for convenience, the term ‘organization’ has been used throughout this Standard. This Standard specifies the elements of the risk management process, but it is not the purpose of this Standard to enforce uniformity of risk management systems. It is generic and independent of any specific industry or economic sector. The design and implementation of the risk management system will be influenced by the varying needs of an organization, its particular objectives, its products and services, and the processes and specific practices employed. This Standard should be applied at all stages in the life of an activity, function, project, product or asset. The maximum benefit is usually obtained by applying the risk management process from the beginning. Often a number of discrete studies are carried out at different times, and from strategic and operational perspectives. 2. Duty of care: is a legal obligation which is imposed on an individual requiring that they adhere to a standard of reasonable care while performing any acts that could foreseeably harm others. It is the first element that must be established to proceed with an action in negligence. The claimant must able to show a duty of care imposed by law which the defendant has breached. In turn, breaching a duty may subject an individual to liability. Company law: is the study of how shareholders, directors, employees, creditors...
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...risks faced by business firms STRATEGIC RISK: Uncertainty regarding firm's financial goals OPERATIONAL RISK: Firm's operation results FINANCIAL RISK: Uncertainty of loss due to adverse changes ENTERPRISE MANAGEMENT RISK: Single program all major risks faced by business firms (PSSOF) HAZARD: Condition that increases the chance of loss HEDGING: transferring risk to a speculator INCORPORATION: Business firm transfers risk to creditors LEGAL HAZARD: Characteristics of legal system that increases frequency of loss LIABILITY RISKS: Possibility of being held legally liable for someone else (no max limit) LOSS EXPOSURE: Any situation where a loss is possible, whether a loss occurs or not LOSS PREVENTION: Activities to reduce frequency of loss MORAL HAZARD: Dishonesty in an individual that increases frequency of loss NONDIVERSIFIABLE RISK: Affects entire economy or large groups (can't be reduced or eliminated) NONINSURANCE TRANSFERS: Transfer risk to another party OBJECTIVE PROBABILITY: infinite observations and no change in underlying condition OBJECTIVE RISK: Relative variation of actual loss from expected loss PERIL: Cause of the loss PERSONAL RISK: Risk that directly affect individual or family PHYSICAL HAZARD: Physical condition that increases frequency of loss PROPERTY RISK: Property losses from destruction or theft PURE RISK: Situation where a possibility of loss or no loss (personal, property, liability) RETENTION: Individual or business firm retains part...
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...Underpinnings of Business Law Anthony Bourdain BUS 670 Professor Pat Riley May 23, 2016 Business ownership is formed around the concept of what the business owner(s) have in mind with regard to personal benefits and limitations. As with any type of business venture or partnership, there are financial advantages and disadvantages of normal day-to-day operations that can lead to court actions as a result of specified liabilities involved. In the matrix provided below, comparisons and contrasts of personal liability exposure associated with sole proprietorship, general partnership, limited partnership (LP), corporations, and limited liability companies (LLC) in a lawsuit for breach of contract is shown using Tinker’s Home Security Service brand. This paper will identify the underpinnings of business law and how business owners can prevent and in most cases avoid the possibilities of litigation from coming to fruition. Tinker’s Home Security Service is set up as a sole proprietorship meaning that the business is owned and operated by a single business owner. Many owners looking to startup a business consider this approach because of its simplicity, independence and affordability. Authors Hopson and Hopson (2014) mentions how a sole proprietorship is least demanding to frame and upkeep. (Hopson & Hopson, 2014, p. 47). Less downtime and maintenance will only help improve productivity thus leading to positive financial gains. The downside to this business type is that along...
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...Structural Risk Management (Asset/Liability Management) (ALM) Section Topic Page 7000 Executive Summary…………………………………………… 7-2 7100 Legislative Summary………………………………………….. 7-3 7200 Policy……………………………………………………………. 7-5 7201 Asset/Liability Management Philosophy…………………….. 7-6 7202 Balance Sheet Mix…………………………………………….. 7-7 7203 Managing Liabilities…………………………………………… 7-9 7204 Managing Assets………………………………………………. 7-13 7205 Pricing…………………………………………………………… 7-14 7206 Terms……………………………………………………………. 7-15 7207 Interest Rate Risk……………………………………………… 7-16 7208 Matching Maturities……………………………………………. 7-17 7209 Foreign Currency Risk………………………………………… 7-18 7210 Financial Derivatives…………………………………………... 7-19 7300 Planning………………………………………………………… 7-21 7400 Risk Measurement and Board Reporting…………………… 7-22 7401 Mix and Yields…………………………………………………. 7-25 7402 Growth………………………………………………………….. 7-26 7403 Financial Margin……………………………………………….. 7-27 7404 Interest Rate Risk Measurement…………………………….. 7-28 7405 Monitoring Derivatives………………………………………… 7-35 7500 Risk Management……………………………………………… 7-36 7501 Reliance on Qualified and Competent Staff and Volunteers 7-37 7502 Managing Interest Rate Risk… ……………………………… 7-38 Executive Summary The goal of asset/liability management (ALM) is to properly manage the risk related to changes in interest rates, the mix of balance sheet assets and liabilities, the holding of foreign currencies, and the use of derivatives. These risks should be managed...
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...Plan Susan Holmes, Marcia Kelly, Peter Flores, Ronald Cox, Celeste Mellett, and Orlinda Watson, LAW/531 April 9, 2012 Instructor Name: Thane Messinger Understanding the position companies must take to protect the interests of investors and employees, the organization must have compliance plan in place. The compliance plan must address every possible liability that can bring financial and physical harm to the company. The organization must work with each department to understand the risks involved with each job. Knowing the risks and working to help the employees understand what those risks are and will help keep the employee minimizing risks of the organization. The compliance plan helps list the goals Riordan Manufacturing established to ensure the employees know the correct steps to comply with the laws and regulations. Legal Risk Exposure and Responses Traditionally, Riordan Manufacturing Company legal counsel interacts primarily with executive management and the board of directors to report on existing, pending, and probable litigation. Although this responsibility continues to be critical, it is imperative that there be an increased presence of legal counsel to the internal organization. It is important for counsel to act as an internal company consultant to help reduce legal risks. Activities include circulating existing legal risks status data, consulting internal management, acting as a sounding board for staff to determine risks associated with...
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...Legal Underpinnings of Business Law Shawn Akey BUS670 Dr. Callaway September 22, 2014 Legal Underpinnings of Business Law During this week, the reading talked about the foundations of business law, including constitutional law as it applies to business, and a comparison of several common business organizational forms. Additionally, various ethical theories were introduced in order to provide perspective to various business outcomes. This paper will deliberate over a scenario raised during the course, concerning a case study on the Tinker & Tailor Home Security Service business and their current legal issues. Along with discussing the scenario, an explanation of each facet of it, as well as provide examples of each as they pertain to the real world will be included. The scenario focused on in this discussion is the creation of a matrix that lists each business, and compares and contrast personal liability exposure as an owner as a result of the lawsuit. For each business entity, analyze how the liability exposure might be limited as an owner. Examine the best business organizational form for the business that might be owned someday in a personal manner. The overall goal will be to show that through the proper manipulation of various legal aspects, exposure to and protection from legal suit can be minimized. The following quote from Jack Kingston sets the stage for the discussion on legal woes of the Tinker & Tailor Home Security business, “Frivolous lawsuits are...
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...Chapter 1: Introduction 1.0. Introduction The term “foreign exchange” basically refers to buying the currency of one country while selling the currency of another country. All nations have their own, different kinds of money (currency). This has existed throughout the ages, probably since the time of the Babylonians. As trading developed between nations, the need to convert one kind of money to another also developed. This is how a formal system of foreign exchange arose. As trade between nations developed, Britain, as the nation with the largest and strongest navy, could spread its commercial interests far and wide. It therefore became the most active trading nation, with a vast empire of colonies. As a result, Britain’s currency, the pound sterling, became a benchmark to which other currencies were compared (and exchanged) for most of the seventeenth, eighteenth and nineteenth centuries. Today, most currencies are compared to the U.S. Dollar, currently the most active and commercially strong trading nation; many currencies are still “pegged” to the U.S. Dollar for their exchange rate. Because FX risks can be identified, they can be managed. Foreign exchange management requires that governments, companies, and individuals understand the factors that influence the valuation of currency. By identifying these factors, they can enter into transactions that mitigate the risks to acceptable levels. These transactions, or hedge positions, are designed to maximize the economic...
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...the organization’s financial assets and intangibles, such as reputation and standing in the community. The risk management plan is a primary tool for implementing the organization’s overall risk management program. It is designed to provide guidance and structure for the organization’s clinical and business services that drive quality patient care while fostering a safe environment. The focus of the risk management plan is to provide an ongoing, comprehensive, and systematic approach to reducing risk exposures. Risk management activities include identifying, investigating, analyzing, and evaluating risks, followed by selecting and implementing the most appropriate methods for correcting, reducing, managing, transferring and/or eliminating them. Scope (When) Under the direction of the risk manager, the risk management program provides for collaboration among all departments, services, and patient care professionals within the organization. The risk management program provides policies, procedures and protocols to address events which may create business-related liability, professional liability, general liability, workers compensation, and motor vehicle liability exposures. The identification, investigation and management of accidents, injuries and other potentially compensable events are a primary responsibility under the risk management plan. This process is directed by the risk manager and others who are delegated to participate in the various components of managing adverse...
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... 5 Homework You Be the Consultant 1. Which form(s) of ownership would you recommend to the Kinseys? Explain. Due to the Kinsey's desire to minimize their exposure to potential legal and financial problems, their choice of ownership should be a corporation. 3. What factors should the Kinseys consider as they try to choose the form of ownership that is best for them? Students should list and briefly discuss the factors that every entrepreneur should consider prior to making a final decision on the form of ownership like: taxes, liability, capital, business goals, management succession and so on. Discussion Questions 1. What factors should an entrepreneur consider before choosing a form of ownership? Factors to be considered before choosing a form of ownership include: * Tax considerations – calculate the firm's tax bill under each form of ownership. * Liability exposure - how much personal liability is involved in the ownership form? * Start-up capital required - how much capital does the entrepreneur have and how much will he need? * Control - how much control is involved for each type of business organization? How much is the entrepreneur willing to give up? * Business goals - how large and profitable does the entrepreneur expect the business to be? * Management succession plans - consider smooth transition when passing company to the next generation of buyers. * Cost of formation - some forms are more...
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...the past three (3) years. Bill Carter, the company’s corporate attorney, on attending one of the weekly beer busts received good reviews about working at Quantum. After a work day of 16 hours, six (6) days a week, the beer bust held every Friday afternoon seemed to be keeping employee morale at an enthusiastic level. However, Bill Carter had some reservations or concerns about serving alcohol at a company sponsored party especially after observing a new employee’s behavior at the party after he had lost his balance and fell on the snack table. He believed that the beer bust parties were getting out of hand and could possibly result in an exposure to liability. There is now a dilemma between wanting to keep the team spirit and at the same time reduce Quantum’s liability exposure. Review of the Case The case, TGIF, presents an organization, Quantum Software that though it was founded three (3) years ago has managed to set for itself an organizational culture that can majorly be described as fun, relaxed and amicable yet hard-working. Organizational culture, according to Robbins & Barnwell (2002), is the pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, to be taught to new members as the new...
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...since "insurance will pay for it." b. Define physical hazard, moral hazard, attitudinal. hazard, and legal hazard. (1) Physical hazard: physical environment which could increase or decrease the probability or severity of a loss. It can be managed through risk-improvement, insurance policy terms, and premium rates. (2) Moral hazard: attitude and ethical conduct of the insured. It cannot be managed but can be avoided by declining to insure the risk. Read more: http://www.businessdictionary.com/definition/hazard.html#ixzz3PRGECZxS 4. a. Explain the difference between pure risk and speculative risk 1. Pure Risk situations are those where there is a possibility of loss or no loss. There is no gain to the individual or the organization. WHERE AS Speculative Risks are those where there is a possibility of gain as well as loss. The element of gain is inherent or structured in such a situation. 2. Pure risks are generally insurable while the speculative ones are not. 3. The conceptual framework of the risk pooling can be applied to the pure risks, while in most of the cases of speculative risks where it is not possible. However, there may be...
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