Risk management assignment

ASSIGNMENT A

Q1)  A factory owner has started his business with an initial investment of Rs. 6 lakhs where he has invested for starting up his production activities for Rs. 3.50 lakhs. Over a certain period of time, the owner engages his entire production team for producing 1,000 additional units per day which has exceeded its present production capacity by 10%.  Which type of risk has been taken by factory owner which has superceded his existing production.

Q3)  In a clinical trial of a drug to prevent migranes, 2 of 100 people taking the drug experience a migrane(2%), compared with 4 of 100 people taking a placebo(4%). It is concluded that there were 2% (4%-2%) fewer migranes in taking the drug. Which fundamental statistical analysis of risk reduction has been applied in testing the drug?

Q6)  The forecasters predicted that the city will be warm with 5 degree Fahrenheit temperature than the historical average. Using this information,the ABC company anticipates that its revenues would be affected by that kind of weather. But the same company would most likely purchase an insurance policy for protection against damages caused by a flood and hurricane. Determine which kind of alternative to insurance products a company can opt for hedging against winters?

Q7)  Mr. X while undergoing treatment for his cancer has applied to insurance company for recovering the amount of his overall treatment. He has submitted the reports of all the details related to his diseases and the costs involved during the surgery. During the treatment, his doctor have detected a certain kind of tumor and found it to be incurable. Mr. X have only recovered Rs. 1,50,000 including the medical expenses but have not recovered the money for incurable tumor. He further have filed an RTI with IRDA for recovering the expenses of that incurable tumor so that he can approach highly specialized doctor in U.S.A. Determine which principle IRDA should follow for helping Mr. X to recover the full amount of his surgery.

Q8)  The major disruption caused by consistent earthquakes in Nepal have lead to a major destruction in the commercial areas resulting in heavy lossesfor the country. The due diligence committee of Nepal Government are inspecting the major affected areas for the re-establishment of new offices and buildings. Estimate the calculation method used by the underwriters of the due diligence committee for helping the Nepal Government for fixing their budget for the rehabilitation of the entire country.

Case Study

Q1. You are a Risk manager at Wills. You are required to roughly estimate the overall costs of risk associated in entire aircraft operations?

Q2. You are an underwriter of this company. Study from the internet the average costs involved in aircraft operations and calculate Probable.

 
3.    Analyze what kind of documents are needed by Wills for conducting Risk Inspection? 

Assignment Part C

Question No.  1    Marks - 10
________________________________________
What is defined as a decline in or disappearance of value due to a contingency?    
 
Options    
    
(Financial Loss  )

Material Loss

Emotional loss

Unexpected loss

Question No.  2    Marks - 10
________________________________________
Risk management facilitates an organization in the avoidance of a great financial losses which ultimately results into?    
 
Options    
    
Financial loss

Bankruptcy

(Gains)

Adversities

Question No.  3    Marks - 10
________________________________________
Which techniques will be used for managing the risks, once the risks have been identified and assessed?    
 
Options    
    
Avoidance

Reduction

( All of the above)

Transfer

Question No.  4    Marks - 10
________________________________________
Which category of risk includes risks that are so large or catastrophic that they either cannot be insured against or the premiums that would be infeasible?    
 
Options    
    
Risk Avoidance

Risk Reduction

Risk Retention

(Risk Transfer)

Question No.  5    Marks - 10
________________________________________
Which category of risk is defined as the subjective judgment that people make about the characteristics and severity of a risk?    
 
Options    
    
( Risk Identification)

Risk Perception

Risk Retention

Risk Transfer

Question No.  6    Marks - 10
________________________________________
Which of the following describe the reasons for the causes of operative risks?    
 
Options    
    
Internal and External Fraud

Employment Practices and Workplace Safety

( Client, Products and Business Practices)

All of the above

Question No.  7    Marks - 10
________________________________________
Which funds have been set aside by the project team for addressing the unforeseen events that cause the project costs to increase?    
 
Options    
    
Business Planning Funds

Governmental Funds

( Reserve funds)

Contingency Funds

Question No.  8    Marks - 10
________________________________________
Which statistical technique makes  assumptions about distributions relating to the severity and the frequency of the individual losses?    
 
Options    
    
Monte Carlo Simulation of Distributions

Normal Distribution

Poisson Distribution

(Bionomial Distribution)

Question No.  9    Marks - 10
________________________________________
Which type of risk arise out of the nature of the society that we live in are largely uninsurable and those that arise due to some physical occurrence depend for their insurability on the circumstances?    
 
Options    
    
Fundamental Risk

( Personal Risk)

Pure Risk

Particular Risk

Question No.  10    Marks - 10
________________________________________
Which type of risk reduction technique describes the excess risk occuring as a result of the changes in risk of a given activity or treatment in relation to a control activity or treatment?    
 
Options    
    
(Relative Risk Reduction)

Risk Transfer

Absolute Risk Reduction

Risk Retention

Question No.  11    Marks - 10
________________________________________
Which of the following disasters kill thousands of people and destroy billions of dollars of habitat and property each year?    
 
Options    
    
( Earthquake)

Landslides

Volcanic eruptions

All of the above

Question No.  12    Marks - 10
________________________________________
Which technique involves different regions, different professions and different scientific fields, that becomes an important measure for human, society and nature for sustainable development?    
 
Options    
    
Disaster reduction

( Disaster assessment)

Disaster Mitigation

Disaster Preparation

Question No.  13    Marks - 10
________________________________________
Which type of disasters are caused by ignorance, mistakes or knowingly done careless development activities?    
 
Options    
    
Natural disaster

(Man-made disaster)

Biological hazards

Displaced populations

Question No.  14    Marks - 10
________________________________________
What comprises disaster management strategies?    
 
Options    
    
Relative Risk Reduction

(Risk Transfer)

Absolute Risk Reduction

Risk Retention

Question No.  15    Marks - 10
________________________________________
The risk control measures fall into which of the following categories?    
 
Options    
    
Physical protection

Procedural protection

Educational protection

( All of the above)

Question No.  16    Marks - 10
________________________________________
Which measure attempts to reduce the frequency of loss associated with inescapable risks by preventing the occurrence of loss?    
 
Options    
    
Risk avoidance

( Loss prevention)

Loss reduction  

Retention

Question No.  17    Marks - 10
________________________________________
When an insurance company transfers a part of risk to other companies is known as?    
 
Options    
    
Reinsurance

Portfolio effect

Financial capacity

(Risk Transfer)

Question No.  18    Marks - 10
________________________________________
Which principle helps to analyze the transfer of financial effect of risk to another party ?    
 
Options    
    
Risk Avoidance

Risk reduction

Risk transfer

(Risk Retention)

Question No.  19    Marks - 10
________________________________________
Which method reduces portfolio risk or some business risks involving future transactions?    
 
Options    

Leading

Hedging

Lagging

(Insurance)

Question No.  20    Marks - 10
________________________________________
Which principle states that one who has indemnified another’s loss is entitled to recover compensation for any liable third party who is responsible?    
 
Options    
    
Principle of Contribution

Principle of Indemnity

Principle of Subrogation

( Principle of Insurable Interest)

Question No.  21    Marks - 10
________________________________________
Which principle provides a practical method of collecting data related to the subject matter or the risk to be covered by the insurance company?    
 
Options    
    
(Principle of Utmost Good Faith)

Principle of Indemnity

Principle of Subrogation

Principle of Insurable Interest

Question No.  22    Marks - 10
________________________________________
Which principle is the fundamental principle that strongly supports the principle of indemnity, which holds that, an insured must be made good the loss that he has actually suffered?    
 
Options    
    
Principle of Utmost Good Faith

(Principle of Contribution)

Principle of Subrogation

Principle of Insurable Interest

Question No.  23    Marks - 10
________________________________________
Which principle states that the insurer paying the claim has right upon other insurers to pass or transfer part of his burden?    
 
Options    
    
Principle of Utmost Good Faith

(Principle of Contribution)

Principle of Subrogation

Principle of Insurable Interest

Question No.  24    Marks - 10
________________________________________
Which contracts are traded both on established exchanges  and Over-the-Counter market (OTC)?    
 
Options    
    
Derivatives

Insurance

Contract of good faith

( Contract of Subrogation)

Question No.  25    Marks - 10
________________________________________
Which groups tend to be comprised of companies with similar risk profiles where each member of a pool shares the profits and losses of the pool through a so-called joint and several liability arrangement?    
 
Options    
    
Captive Insurer

Risk Retention Groups

Self-Insurance Groups

(Risk Prevention Groups)

Question No.  26    Marks - 10
________________________________________
Which financial instruments are used by the companies as part of a risk management strategy to reduce the risk associated with adverse or unexpected weather conditions?    
 
Options    
    
Credit securitization

( CAT Bonds)

Finite risk products

Weather Derivatives

Question No.  27    Marks - 10
________________________________________
What are the three categories of financial risks?    
 
Options    
    
Market Risk

Credit Risk

Operational Risk

(All of the above)

Question No.  28    Marks - 10
________________________________________
Who works within both the organizational process and leadership bureaucracy to efficiently create the risk process?    
 
Options    
    
Marketing Manager

Risk Manager

Finance Manager

( Production Manager)

Question No.  29    Marks - 10
________________________________________
Which process provides opportunities for members to understand their roles and responsibilities as the structure of the organization changes?    
 
Options    
    
Cultural

Structural

Communication

(Training)

Question No.  30    Marks - 10
________________________________________
Which cost is directly correlated to the viability of a facility’s safety and health program?    
 
Options    
    
(Worker's Compensation)

Workplace Compensation

Training Compensation

Direct Compensation

Question No.  31    Marks - 10
________________________________________
Which of the following factors influence the success of the training programme?    
 
Options    
    
( the high quality of the training manual)

the use of an ongoing mentorship programme

the extensive use of self and peer group critiquing skills

All of the above

Question No.  32    Marks - 10
________________________________________
Which risk control alternative completely eliminates the chance of a particular type of loss?    
 
Options    
    
Loss Prevention

Risk Avoidance

Loss reduction

(Utilization of Non-Insurance Transfers)

Question No.  33    Marks - 10
________________________________________
Which amongst the following are the aspects of effective monitoring and control?    
 
Options    
    
Setting standards for defining acceptable performance

(Comparison of actual results with these standards)

Correcting actual results to more fully comply with standards

All of the above

Question No.  34    Marks - 10
________________________________________
Which inspection technique is described as an Optimal maintenance business process that is used to examine equipment such as pressure vessels, heat exchangers and piping in industrial plants?    
 
Options    
    
Risk Surveillance

Risk Supervision

Risk Based Inspection

( Risk Evaluation)

Question No.  35    Marks - 10
________________________________________
Which estimation is used to determine the extent of losses in Chemical & Petrochemical Industries?    
 
Options    
    
Probable Maximum Loss

(Normal Distribution)

Poisson Distribution

Standard Distribution

Question No.  36    Marks - 10
________________________________________
PML estimation is used in which of the following industries?    
 
Options    
    
Aeronautical Industries

Manufacturing Industries

(Chemical and Petrochemical Industries)

Dairy Industries

Question No.  37    Marks - 10
________________________________________
Which deductible is referred to as the amount for which the client is responsible for each individual employee or dependent claim in the policy year?    
 
Options    
    
(Quota Share)

Stop-loss

facultative

proportional treaty

Question No.  38    Marks – 10 Solve by www.solvezone.in contact for more details at - 8882309876
________________________________________
What are the three main methods of reinsurance?    
 
Options    
    
facultative

claim-settlement

facultative obligatory

(All of the above)

Question No.  39    Marks - 10
________________________________________
Which treaty is called a proportional treaty where both the parties participate in the premiums and claims in the same percentage as they have retained and accepted?    
 
Options    
    
Quota Share treaty

Surplus Treaty

(Combined treaty)

proportional treaty

Question No.  40    Marks - 10
________________________________________
Which form of reinsurance increases underwriting capacity as it enables risks to be written over and above the capacity of automatic treaties?    
 
Options    
    
( claim-settlement)

facultative obligatory

Facultative

proportional treaty