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BMS B204 RISK Management Notes

Bachelor of commerce (Pwani University)

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LECTURE NOTES FOR RISK MANAGEMENT (BBA B204)

BCOM GROUP

By

Dr Josephine Miyonga-Kilifi, PhD

2020
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BMS B204: RISK MANAGEMENT

Course Objective
Develop an understanding of risk and how to apply risk management in organizations.

Expected Learning Outcomes;

By the end of the course the learner should be able to:

 Understand Risk and Risk Management.
 Identify the types of Risks in organizations.
 Classifying and prioritizing risk.
 Establish Risk Management Strategies and Procedures.
 Build skills on Risk Management practices and decisions.

COURSE OUTLINE

LESSON CONTENT

1. Basic concepts in risk management

2. Risk identification and selection; sources, Individual and collective risks

3. Evaluation and treatment of an organization’s risks

4. Strategies of risk management

5. Concepts of loss

6. CAT1

7. credibility and Ruin

8. Economies of insurance

9. Special case of insurance

10. Positioning of the risk management tasks in the corporate structure,

11. Challenges in risk management

12. CAT2

13. Insurance

14. Insurance

15&16 EXAMINATIONS

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RISK MANAGEMENT NOTES

CONCEPT OF RISK

Meaning of Risk

‘Risk’ contains a suggestion of loss or danger. We may therefore define it as ‘uncertainty

concerning a potential loss’, a situation in which we are not sure whether there will be loss of
a certain kind, or how much will be lost. It is this uncertainty and the undesirable element
found with risk that underlie the wish and need for insurance OR

Risk is defined as the possibility of something happening that impacts on your objectives. It
is the chance to either make a gain or a loss. It is measured in terms of likelihood and
consequence…”

Risk can also be defined as the uncertainty of future events that might influence the
achievement of one or more objectives such as an organization’s strategic, operational and
financial objectives

What is Risk Management?

It’s a process whereby an organization identifies, analyses, understands and addresses the
risks to which it is exposed. Risk management also guarantees that the organization creates
and implements an effective plan to prevent losses or reduce their occurrence probability and
their impact if a loss occurs. A risk management plan includes strategies and techniques for
recognizing and confronting these threats. Good risk management doesn’t have to be
expensive or time consuming; it may be as uncomplicated as answering these three
questions:
 What can go wrong?
 What will we do, both to prevent the harm from occurring and in response to the harm
or loss?
 If something happens, how will we pay for it?

It is an approach to pure risk and not speculative risk.

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Risk management is a merger of finance, insurance, loss prevention, control and decision
making. Risk management was considered by Henry Fayol as security of property and
persons.
Risk managers deal with pure risk only unlike general managers. The find answer to
questions like?
i. Which risks are insurable and the non-insurable?
ii. Which risks should the firm retain and those to transfer?
iii. How much cost will the firm save if it retains a risk?

Misconceptions about risk management are:

i. Risk management is applicable only to large organizations.
ii. Risk management seeks to minimize the role of insurance.

Risk exists because entities, companies and organizations have assets of a material or
immaterial nature that could be subjected to damage that has consequences on the entity in
question. Four important things here are:
 Assets, a term often used in the field of IT security
 Asset damage
 Consequences for the entity
 Possible but uncertain causes

Important Definitions in Risk Management

 Perils: an unfavourable event e.g. fire, earth quake, an accident etc.

 Risks: chance of losing something of value over the gains of a certain action or
inaction. Risk is the combination of an asset together with threat of that asset.
 Hazards: these are conditions that accelerate the occurrence of an unfavourable event
or its impact.
 Impact: the value/cost of loss either quantitatively or quantitatively, or both, of an
unfavourable event
 Probability: the chance of occurrence high/low derived from statistical analysis of
historic organizational or industry data.

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 Magnitude: the impact times probability

Hazards
These are conditions that may accelerate the occurrence of, or the impact of an unfavourable
event. These conditions may be as follows:
 Physical hazards; a wet surface, lose ground, spilt gas, shoddy structures…
 Nuclear hazards: exposure to radiations, sun rays, some minerals…
 Biological hazards: disease causing bacteria, enzymes, viruses…
 Psychological hazards: stress, a tired mind, disturbing news…
 Environmental hazards: stagnant water, cliffs…
 Chemical: exposed acids, toxic gases…

Basic Principles of Risk Management

The International Organization for Standardization (ISO) identifies the following principles
of risk management: Risk management should:
 Be Cost effective: resources expended to mitigate risk should be less than the
consequence of inaction.
 Be tailor-able/flexible/be dynamic and responsive to change
 Be capable of continual improvement and enhancement
 Be based on the best available information/data
 Be an integral part of organizational processes
 Be continually or periodically re-assessed
 Be systematic and structured process
 Be part of decision making process
 take human factors into account
 Be transparent and inclusive

Why manage your risk?

An organization should have a risk management strategy because:

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 People are more aware of the level of service to expect, and the recourse they can take
if they have been wronged.
 People are now more likely to sue. Taking the steps to reduce injuries could help in
defending against a claim.
 Courts are often sympathetic to injured claimants and give them the benefit of the
doubt.
 Organizations are perceived as having a lot of assets and/or high insurance policy
limits.
 Organizations are being held liable for the actions of their employees/volunteers.
 Organizations and individuals are held to very high standards of care.

Risk management may produce positive opportunities for developers although the negative
aspects of risk are usually the once that are emphasized.

Likelihood of risk occurring varies from industry to industry and how complex a job may be.
Some areas where there is a high chance of risk are construction, transport, mining,
healthcare, sports, finance and banking, insurance and superannuation.

The potential loss that risk presents may be:

(a) Financial: i.e. measurable in monetary terms (e.g. loss of a camera by theft);
(b) Physical: death or personal injury (often having financial consequences for the
individual or his family); or
(c) Emotional: feelings of grief and sorrow.
Only the first two types of risks are likely to be (commercially) insurable risks. Also,
from a wider perspective, not every risk will be seen in the negative form we have just
outlined.

Classification of Risks
Risks may be classified in the following categories;

• Financial and Non-financial risks

Losses whose outcome can be measured in monetary terms or not.
• Particular and Fundamental risks
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Particular risks are personal in both cause and effects while fundamental risks are
widespread, indiscriminate and uncontrollable inflation, wars natural calamities.
• Static and Dynamic risks
Risks that don’t really change with changes in the economy e.g. accidents, fire, theft etc
against those that are caused by the changes in economy are unpredictable and keep
moving e.g. consumer tastes, inflation, income, technology.
• Pure and Speculative Risks
Pure risks have only two outcomes loss or no loss while speculative has three outcomes:
a loss, no loss, a gain/profit e.g. investing, gambling, starting a given project etc.

1. DIVERSIFIABLE AND NONDIVERSIFIABLE RISKS

As noted above, another important dichotomy risk professional use is between
diversifiable and non diversifiable risk. Diversifiable risks are those that can have their
adverse consequences mitigated simply by having a well-diversified portfolio of risk
exposures. For example, having some factories located in non earthquake areas or hotels
placed in numerous locations diversifies the risk. If one property is damaged, the others
are not subject to the same geographical phenomenon causing the risks. Diversification is
the core of the modern portfolio theory in finance and in insurance. Risks, which
are idiosyncratic (with particular characteristics that are not shared by all) in nature, are
often viewed as being amenable to having their financial consequences reduced or
eliminated by holding a well-diversified portfolio.

Systemic risks that are shared by all, on the other hand, such as global warming, or
movements of the entire economy such as that precipitated by the credit crisis of fall
2008, are considered non diversifiable. Every asset or exposure in the portfolio is
affected. The negative effect does not go away by having more elements in the portfolio.

2. PURE VERSUS SPECULATIVE RISK EXPOSURES

Professionals note several different ideas for risk, depending on the particular aspect of
the “consequences of uncertainty” that they wish to consider. Risk professionals often
differentiate between pure risk that features some chance of loss and no chance of gain
(e.g., fire risk, flood risk, etc.) and those they refer to as speculative risk. Speculative

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risks feature a chance to either gain or lose (including investment risk, reputational risk,
strategic risk, etc.).

Enterprise risk management (ERM) is one of today’s key risk management approaches. It
considers all risks simultaneously and manages risk in a holistic or enterprise-wide (and risk-
wide) context. ERM was listed by the Harvard Business Review as one of the key
breakthrough areas in their 2004 evaluation of strategic management approaches by top
management.
Examples of Pure versus Speculative Risk Exposures
Within the class of pure risk exposures, it is common to further explore risks.

a. Personal Pure Risk

Because the financial consequences of all risk exposures are ultimately borne by people (as
individuals, stakeholders in corporations, or as taxpayers), it could be said that all exposures
are personal. Some risks, however, have a more direct impact on people’s individual lives.
Exposure to premature death, sickness, disability, unemployment, and dependent old age are
examples of personal loss exposures when considered at the individual/personal level. An
organization may also experience loss from these events when such events affect employees.
For example, social support programs and employer-sponsored health or pension plan costs
can be affected by natural or man-made changes. The categorization is often a matter of
perspective. These events may be catastrophic or accidental.

b. Property Pure Risk

Property owners face the possibility of both direct and indirect (consequential) losses. If a
car is damaged in a collision, the direct loss is the cost of repairs. If a firm experiences a fire
in the warehouse, the direct cost is the cost of rebuilding and replacing
inventory. Consequential or indirect losses are nonphysical losses such as loss of business.
For example, a firm losing its clients because of street closure would be a consequential loss.
Such losses include the time and effort required to arrange for repairs, the loss of use of the
car or warehouse while repairs are being made, and the additional cost of replacement
facilities or lost productivity. Property loss exposures are associated with both real property
such as buildings and personal property such as automobiles and the contents of a building.
A property is exposed to losses because of accidents or catastrophes such as floods or
hurricanes.

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c. Liability Pure Risk

The legal system is designed to mitigate risks and is not intended to create new risks.
However, it has the power of transferring the risk from your shoulders to mine. Under most
legal systems, a party can be held responsible for the financial consequences of causing
damage to others. One is exposed to the possibility of liability loss (loss caused by a third
party who is considered at fault) by having to defend against a lawsuit when he or she has in
some way hurt other people. The responsible party may become legally obligated to pay for
injury to persons or damage to property. Liability risk may occur because of catastrophic
loss exposure or because of accidental loss exposure. Product liability is an illustrative
example: a firm is responsible for compensating persons injured by supplying a defective
product, which causes damage to an individual or another firm.

d. Catastrophic or Systemic Pure Risk

Catastrophic risk is a concentration of strong, positively correlated risk exposures, such as
many homes in the same location. A loss that is catastrophic and includes a large number of
exposures in a single location is considered a non-accidental risk. All homes in the path will
be damaged or destroyed when a flood occurs. As such the flood impacts a large number of
exposures, and as such, all these exposures are subject to what is called a fundamental risk.
Generally, these types of risks are too pervasive to be undertaken by insurers and affect the
whole economy as opposed to accidental risk for an individual. Too many people or
properties may be hurt or damaged in one location at once (and the insurer needs to worry
about its own solvency).

e. Accidental Particular Pure Risk

Many pure risks arise due to accidental causes of loss, not due to man-made or intentional
ones (such as making a bad investment). As opposed to fundamental losses, non-catastrophic
accidental losses, such as those caused by fires, are considered particular risks. Often, when
the potential losses are reasonably bounded, a risk-transfer mechanism, such as insurance,
can be used to handle the financial consequences.

To simplify a complex subject, we may classify risk under two broad headings (each having
two categories) according to:
(a) Its potential financial results; and
(b) Its cause and effect.

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Financial Results
Risks may be considered as being either Pure or Speculative:
(i) Pure Risks offer the potential of loss only (no gain), or, at best, no change. Such
risks include fire, accident and other undesirable happenings.
(ii) Speculative Risks offer the potential of gain or loss. Such risks include gambling,
business ventures and entrepreneurial activities.

The majority of the risks which are insured by commercial insurers are pure risks, and
speculative risks are not normally insurable. The reason for this is that speculative risks are
engaged in voluntarily for gain, and, if they were insured, the insured would have little
incentive to strive to achieve that gain.

Cause and Effect

Risks may also be considered as being either Particular or Fundamental:

(i) Particular Risks: They have relatively limited consequences, and affect an
individual or a fairly small number of people. The consequences may be serious,
even fatal, for those involved, but are comparatively localised. Such risks include
motor accidents, personal injuries and the like.

(ii) Fundamental Risks: Their causes are outside the control of any one individual or
even a group of individuals, and their outcome affects large numbers of people.
Such risks include famine, war, terrorist attack, widespread flood and other
disasters which are problems for society or mankind rather than just the
‘particular’ individuals involved.

The majority of the risks which are insured by commercial insurers are particular risks.
Fundamental risks are not normally insurable because it is considered financially infeasible
for insurers to handle them commercially.

Risk Management

‘Risk management’ is a term which is used with different meanings:

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(a) In the world of banking and other financial services outside insurance, it is probably
used with reference to investment and other speculative risks.

(b) Insurance companies will probably use the term only in relation to pure risks, but they
may well restrict it even further to insured risks only. Thus, when insurers talk about
‘risk management’, they could well be referring to ways and means of reducing or
improving the insured loss potential of the ‘risks’ they are insuring, or being invited to
insure;

(c) Risk management is a process that identifies loss exposures faced by an organisation
and selects the most appropriate techniques for treating such exposures. A loss exposure
is any situation or circumstances in which a loss is possible, regardless of whether a loss
occurs. Examples of loss exposures include manufacturing plants may be damaged in an
earthquake or possible theft of company property1 because of inadequate security.

(e) As a separate field of knowledge and research, risk management may be said to be that
branch of management which seeks to:
(i) Identify;
(ii) Quantify; and
(iii) Deal with risks (whether pure or speculative) that threaten an organisation. Tools or
measures of risk handling include:

- risk avoidance: elimination of the chance of loss of a certain kind by not exposing oneself
to the peril (e.g. abandoning a nuclear power project so as to eliminate the risk of nuclear
accidents);

- Loss prevention: the lowering of the frequency of identified possible losses (e.g. activities
promoting industrial safety);

- Loss reduction: the lowering of the severity of identified possible losses (e.g. automatic
sprinkler system);

- Risk transfer: making another party bear the consequences of one’s exposure to loss (e.g.
purchase of insurance and contractual terms shifting responsibility for possible losses);
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- Risk financing: no matter how effective the loss control measures an organisation takes,
there will remain some risk of the organisation being adversely affected by future loss
occurrences. A risk financing programme is to minimise the impact of such losses on the
organisation.

It uses tools like: insurance, risk transfer other than insurance, self-insurance, etc. (Whilst
insurance is closely connected with risk management, it is only one of the tools of risk
management.)

Objectives of risk management

Risk management has important objectives. These objectives can be classified as follows:
I. Pre loss objectives
II. Post loss objectives

These are the objectives before a loss occurs. The most important objectives of this category
include;
a) Economy
This means that the firm should prepare for potential losses in the most economical
way. This preparation involves an analysis of the cost of safety programs, insurance
premiums paid and the costs associated with the different techniques for handling
losses.

b) Reduction of anxiety
This is because certain loss exposures can cause greater worry and fear for the risk
manager and key executive. For example, the threat of a catastrophic lawsuit from a
detective product can cause greater anxiety than a small loss from a minor fire.

c) Meeting legal obligations

For example, government regulation may require a firm to install safety devices to
protect workers from harm, to dispose of hazardous wastes materials property and to
label consumer products appropriately. The risk management must see that these
legal obligations are met. `

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II) Post loss objectives

These are objectives after loss occurs.
These objectives include;

a) Survival of the firm

Survival means that after a loss occur; the firm can resume at least partial operations
within some reasonable time period.

b) To continue operating
For some firm the ability to operate after a loss is extremely important. For example,
Banks, bakeries, dairies and other competitive firms must continue to operate after a
loss. Otherwise business will be lost to competitors.

c) Stability of earnings
Earnings per share can be maintained if the firm continue to operate.

d) Continued growth of the firm

A company can grow by developing new products and markets or by acquiring of
merging with other companies. The risk manager must therefore consider the effect
that a loss will have on the firm’s ability to grow.

e) Social responsibility
This is to minimize the effects that a loss will have on other person and on society. A
severe loss can adversely have affected employees, supplies, creditors and the
community in general. For example, a severe loss that shut down a plant in a small
town for an extended period can cause considerable economic distress in the town

STEPS IN RISK MANAGEMENT PROCESS

There are four steps in the risk management process. The steps are;
1. Identify loss exposures
2. Analyze the loss exposures
3. Select appropriate techniques for treating the loss exposures

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4. Implement and monitor the risk management program

The steps are shown on the figure below:
Steps in the Risk Management Process

Identify Loss Exposures

Analyze the Loss Exposures

Select the Appropriate Techniques for Treating the Loss Exposures

I. Risk Control
a) Avoidance
b) Loss Prevention
c) Loss Reduction

II. Risk Finance

a) Retention
b) Noninsurance Transfers
c) Commercial Insurance

Implement and Monitor the Risk Management Program

CONCEPTS OF LOSS, CREDIBILITY AND RUIN

1. IDENTIFYING LOSS EXPOSURES

The first step in the risk management process is to identify all major and minor loss
exposures. This involves an analysis of all potential loss exposures. The most
important loss exposures relate to the following;

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a. Property loss exposures

 Building, plants and other structures
 Furniture, equipments, suppliers
 Computers, computer software and data
 Accounts receivable, valuable papers and records

b. Liability loss exposures

 Defective products
 Environmental pollution (land, water, air, noise)
 Sexual harassment of employees, discrimination against employees,
wrongful termination.
 Premises and general liability loss exposures
 Liability arising from company vehicles
 Misuse of the internet and email transmissions, transmissions of
pornographic material
 Directors and other officer’s liability suits

c. Business income loss exposures

 Loss of income from a covered loss
 Continuity of expenses after a loss
 Extra expenses
 Contingent business income loss

d. Human resources loss exposures

 Death or disability of key employees
 Retirement or unemployment
 Job-related injuries or diseases experienced by workers

e. Crime loss exposures

 Robberies or burglaries
 Employee theft and dishonesty
 Fraud and embezzlement

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f) Employee benefits loss exposures

 Failure to comply with government regulations
 Group life and health or retirement plan exposures
 Failure to pay promised benefits

g) Foreign loss exposures

 Acts of terrorism
 Foreign currency risks
 Kidnapping of key personnel
 Political risks

A risk manager has several source of information that he or she can use to identify the
preceding loss exposures. They include the following:

 Risk analysis questionnaire: Questionnaires require the risk manager to answer

numerous questions that identify major and minor loss exposures.
 Physical inspection: A physical inspection of company plants and operations can
identify major loss exposures.
 Flow charts: Flow charts that show the flow of production and delivery can reveal
production bottlenecks where a loss can have severe financial consequences for the
firm.
 Financial statements: Analysis of financial statements can identify the major assets
that must be protected, loss of income exposures and key customers and suppliers.
 Historical loss data: Historical and departmental loss data over time can be valuable
in identifying major loss exposures.

In addition, risk management must continue to monitor industry trends and market
changes that can create new loss exposures and cause concern. Major risk
management issues include risking worker’s compensation costs, financial risk
though the capital markets and repetitive motion injury claims.

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2. ANALYZE THE LOSS EXPOSURES

The second step in the risk management process is to analyze the loss exposure. This
step involves an estimation of the frequency and severity of loss.

Loss frequency refers to the probable number of losses that may occur during some
given period loss.

Loss severity refers to the probable size of the losses that may occur.

Once the risk manager estimates the frequency and severity of loss for each type of
loss exposure, the various loss exposure can be ranked according to their relative
importance. For example, a loss exposure with the potential for bankrupting the firm
is much more important in a risk management program than an exposure with a small
loss potential.

In addition, the relative frequency and severity of each loss exposure, must be
estimated so that the risk manager can select the most appropriate technique, or
combination of techniques for handling each exposure. For example, if certain losses
occur regularly and are fair predictable, they can be budgeted out of firm’s income
and treated as a normal operating expense.

Although the risk manager must consider both loss frequency and loss severity,
severity is more important because a single catastrophic loss could wipe out the firm.
Therefore, the risk manager must also consider all losses that can result from a single
event. Both the maximum possible loss and maximum probable loss must be
estimated. The maximum possible loss is the worst loss that could happen to the firm
during its lifetime. The maximum probable loss is the worst loss is likely to happen.
For example, if a plant is totally destroyed in a flood, the risk manager estimates that
replacement cost, debris removal, demolition costs and other cost will total $10
million. Thus, the maximum possible loss is $10 million. The risk manager also
estimates that a flood causing more than $8 million of damage to the plant is so
unlikely that such a flood would not occur more than once in 50 years. The risk
manager may choose to ignore events that occur so infrequently. Thus for this risk

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manager, the maximum probable loss is $8 million. Catastrophic losses are difficult
to predict because they occur infrequently. However, their potential impact on the
firm must be given high priority. In contrast, certain losses, such as physical damage
losses to cars and trucks occur with greater frequency, are usually relatively small
and can be predicted with greater accuracy.

SELECT THE APPROPRIATE TECHNIQUES FOR TREATING THE LOSS

EXPOSURES (strategies)
The third step in risk management process is to select the most appropriate
techniques or combination of techniques for treating the loss exposures.
These techniques can be classified broadly as either risk control or risk financing

Risk control refers to techniques that reduce the frequency and severity of losses.

Risk financing Refers to technique that provide for the funding of losses. Many risk
managers use a combination of techniques for treating each loss exposure.

a) Risk control
As noted above, risk control is term used to describe techniques for reducing the
frequency or severity of losses. Major risk control techniques include the
following
I. Avoidance
II. Loss prevention
III. Loss reduction

 Avoidance: Avoidance means a certain loss exposure is never acquired or an

existing loss exposure is abandoned. For example, flood losses can be avoided by not
building a new plant in a flood plain. A pharmaceutical firm that markets a drug with
dangerous side effects can withdraw the drug from the market.

The major advantage of avoidance is that the chance of loss is reduce to zero if the loss
exposure is never acquired. In addition, if an existing loss exposure is abandoned, the
chance of loss is reduced or eliminated because the activity or product that could produce
a loss has been abandoned. Avoidance however has two major disadvantages. First the

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firm may not be able to avoid all losses. For example, a company may not be able to
avoid the exposure. For example, a paint factory can avoid losses arising from the
product of paint. Without paint production, however, the firm will not be in business.

 Loss prevention: refers to measures that reduce the frequency of a particular loss.
For example, measures that reduce truck accident include driver examinations, zero
tolerance for alcohol or drug abuse and strict enforcement of safety rules.

 Loss reduction: refers to measures that reduce the severity of a loss after it occurs.
Example include installation of an automatic sprinkler system that promptly
extinguishes afire, segregation of exposure units such as having warehouse with
inventories at different locations and limiting the amounts of cash on the premises.

1. Implementation of decision:Decision is then made whether to retain or transfer a risk.

Administrative action is then set up with regard to the decision made. Implementation
follows all of the planned methods for mitigating the effect of the risks. Purchase
insurance policies for the risks that have been decided to be transferred to an insurer,
avoid all risks that can be avoided without sacrificing the entity's goals, reduce others,
and retain the rest.

2. Evaluation and review: Evaluation is important to detect and correct errors, identify
new risks, give feedback and check progress. Control requires setting standards,
measuring performance and taking corrective action. Standards should be quantified when
possible e.g. cost of risk which is the total expenditure for risk management expressed as a
percentage of revenue (insurance premiums, retained losses). This cost can be compared
with that of other firms in the industry. Similarly number of incidences can be
benchmarked in risk control. Risk management audits can also be used for review i.e. a
detailed systematic review designed to determine if objectives of the program are
appropriate to organizational needs, whether the measures are suitable and whether they
have been correctly implemented.
Initial risk management plans will never be perfect. Practice, experience, and actual loss
results will necessitate changes in the plan and contribute information to allow possible
different decisions to be made in dealing with the risks being faced.

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Risk analysis results and management plans should be updated periodically. There are two
primary reasons for this:
 to evaluate whether the previously selected security controls are still applicable
and effective
 to evaluate the possible risk level changes in the business environment. For
example, information risks are a good example of rapidly changing business
environment.
SPECIAL CASE OF INSURANCE

b) Risk financing
As stated earlier, risk financing refers to techniques that provide for the funding
of losses after they occur. Major risk financing techniques include the following
I) Retention
II) Noninsurance transfer
III) Commercial insurance

 Retention - means that the firm retains part or all of the losses that can result from a
given loss. Retention can be either active or passive. Active risk retention means that
the firm is aware of the loss exposure and plans to retain part or all of it, such as
collision losses to a fleet of company cars. Passive retention, however, is the failure to
identify a loss exposure, failure to act, or forgetting to act. For example, a risk
manager may fail t identify all company assets that could be damaged in an
earthquake.

 Non insurance transfers - is another risk financing technique. Non – insurance

transfer are methods other than insurance by which a pure risk and its potential
financial consequences are transferred to another party. Examples of non-insurance
transfers include contacts and leases. For example, a company’s contract with a
construction firm to build a new plant can specify that the construction firm is
responsible for any damage to the plant while it is being built. A firm’s computer
lease can specify that maintenance, repair and any physical damage loss to the
computer are responsibility of the computer firm.

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In a risk management program non insurance transfer have several advantages:

 The manager can transfer some potential losses that are not commercially
insurable
 Non insurance transfer often cost les that insurance
 The potential loss may be shifted to someone who is in better position to
exercise loss control
However, non-insurance transfers have several disadvantages:
 The transfer of potential loss may fail because the contract language is
ambiguous.
 If the party to whom the potential loss is transferred is unable to pay the loss,
the firm is still responsible for the claim.
 An insurer may not give credit for the transfers and insurance costs may not
always be reduced.

Commercial Insurance Commercial insurance is also used in a risk management

program. Insurance is appropriate for loss exposures that have a low probability of
loss but for which the severity of loss is high.

If the risk manager use insurance to treat certain loss exposures, five keys area must
be emphasized:
 Select of insurance cover
 Selection of an insurer
 Negotiation of terms
 Dissemination of information concerning insurance coverage
 Periodic review of the program

First, the risk manager must select the insurance coverage needed. The coverage
select must be appropriate for insuring the major loss exposures identified in step
one. To determine the coverage needed, the risk manager must have specialized
knowledge of commercial property and liability insurance contracts.

The risk manger must also determine if a deductible is needed and size of the
deductible. A deductible is a provision by which a specified amount is subtracted

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from the loss payment. A deductible is used to eliminate small claims and the
administrative expense of adjusting these claims. As a result, substantial premium
savings are possible.

Second, the risk manager must select an insurer or several insurers. Several
important factors come to a play here; including the financial strengthen of the
insurer, risk manager services provided by the insurer and the costs and the terms of
protection.

Third, after the insurer or the insurers are selected the terms of the insurance contact
must be negotiated. If printed policies and forms are used, the risk manager and
insurer must agree on the documents that will form the basis of the contact. The
language and meaning of the contractual provisions must be clear to both parties.

Finally, if the firm is large, the premiums may be negotiable between the firm and
insurer. In any cases, an agent or a broker will be involved in the negotiations. In
addition, information concerning insurance cover must be disseminated to other in
the firm. The firm’s employees and manager must be informed about the insurance
coverage, the various records must be kept and the risk management services that the
insurer will provide. Those persons responsible for reporting a loss must also be
informed. The firm must comply with policy provisions concerning how notice of a
claim is to be given and how the necessary proofs of loss are to be presented.

Finally, the insurance program must be periodically reviewed. This review is

especially important when the firm has a change in business operations or is involved
in a merger or acquisition of another firm. The review includes coverage needed and
whether claims are paid promptly.

The use of commercials insurance in a risk management program has certain

advantages.
 The firm will be indemnified after a loss occurs. The firm can continue to operate and
may experience little or no fluctuation in earnings.

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 Uncertainty is reduced which permits the firm to lengthen its planning horizon. Worry
and fear are reduced for managers and employees, which should improve their
performance and productivity.
 Insurers can provide valuable risk management services such as loss-control services,
exposures analysis to identify loss exposures and claims adjusting.
 Insurance premium are income tax deductible as a business expense

The use of insurance also entails certain disadvantages. These are:

 The payment of premiums is major cost because the premium consists of a component
to pay losses, which is an amount of expenses.
 Considerable time and effort must be spent in negotiating the insurance coverage. An
insurer must be selected, policy terms and premiums must be negotiated, the firm
must be cooperated with the loss control activities of the insurer and proof of loss
must be filed with the insurer following loss.
 The risk manager may have less incentive to follow a loss-control program because
the insurer will pay the claim if a loss occurs. Such a lax attitude toward loss control
could increase the number of non-insured losses as well

To be effective the risk management program must be periodically reviewed and

evaluated to determine whether the objectives are being attained. In particular risk
management costs, safety programs and loss prevention programs must be carefully
monitored. Loss records must also be examined to detect any changes in frequency
and severity.

Finally, the risk manager must determine whether the firm’s overall risk management
policies are being carried out and whether the risk manager is receiving the
cooperation of the other departments in carrying out the risk management functions.

ECONOMIES OF INSURANCE
Functions and Benefits of Insurance
Insurance has many functions and benefits, some of which we may describe as
primary and others as ancillary or secondary, as follows:

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(a) Primary functions/benefits: Insurance is essentially a risk transfer mechanism,

removing, for a premium, the potential financial loss from the individual and placing
it upon the insurer.
The primary benefit is seen in the financial compensation made available to insured
victims of the various insured events. On the commercial side, this enables
businesses to survive major fires, liabilities, etc. From a personal point of view, the
money is of great help in times of tragedy (life insurance) or other times of need.

(b) Ancillary functions/benefits: Insurance contributes to society directly or

indirectly in many different ways. These will include:
(i) employment: the insurance industry is a significant factor in the local
workforce;
(ii) financial services: since the relative decline in manufacturing in Hong Kong,
financial services have assumed a much greater role in the local economy,
insurance being a major element in the financial services sector;
(iii) loss prevention and loss reduction (collectively referred to as ‘loss
control’): the practice of insurance includes various surveys and inspections
related to risk management. These are followed by requirements (conditions
for acceptance of risk) and/or recommendations to improve the ‘risk’. As a
consequence, we may say that there are fewer fires, accidents and other
unwanted happenings;
(iv) savings/investments: life insurance, particularly, offers a convenient and
effective way of providing for the future. With the introduction of the Mandatory
Provident Fund Schemes in 2000, the value of insurance products in providing for the
welfare of people in old age or family tragedy is very evident;
(v) economic growth/development: it will be obvious that few people would
venture their capital on costly projects without the protection of insurance (in most
cases, bank financing will just not be available without insurance cover). Thus,
developments of every kind, from erection of bridges to building construction and a
host of other projects, are encouraged and made possible partly because insurance is
available.

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4. IMPLEMET AND MONITOR THE RISK MANAGEMENT PROGRAM

The fourth step is to implement and monitor the risk management program. The step
begins with a policy statement.
A risk management policy statement is necessary to have an effective risk management
program. This statement outlines the risk management objectives of the firm as well as
company policy with respect to treatment of loss exposures. It also educates top level
executives in regard to the risk management process, give the risk manager greater
authority in the firm and provides standards for judging the risk manager’s performance.
In addition, a risk management manual may be developed and used in the program. The
manual describes in some detail the risk management program of the firm and can be
very useful tool for training new employees who will be participating in the program.
Writing the manual also forces the risk manager to state precisely his or her
responsibilities, objectives, and available techniques. The manual also includes important
information, such as procedure to follow in an emergency. The risk manager does not
work alone. Other functional department within the firm are extremely important in
identifying pure loss exposure and methods for treating these exposures.

These departments can cooperate in the risk management process in the following ways:
 Accounting: internal accounting controls can reduce employee fraud and theft of cash
 Finance: information can be provided showing how losses can disrupt profits and
cash flow and the effect that losses will have on the firm balance sheet and profit and
loss statement
 Marketing: accurate parking can prevent liability lawsuits. Safe distribution
procedures can prevent accident.
 Production: quality control can prevent the production of defective goods and
liability lawsuits. Effective safety programs in the plant can reduce injuries and
accident.
 Human resources: this department may be responsible for employee benefits
programs, pension programs, safety program and the company’s hiring, promotion
and dismissal policies. Without the active cooperation of the other departments, the
risk management program will be a failure.

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BENEFITS OF RISK MANAGEMENT

Major benefits include the following:
Risk management provides a clear and structured approach to identifying risks. Having a
clear understanding of all risks allows an organization to measure and prioritize them and
take the appropriate actions to reduce losses. Risk management has other benefits for an
organization, including:

 Saving resources: time, assets, income, property, people are valuable resources that can
be saved if fewer claims occur.
 Preventing or reducing legal liability and increasing the stability of operations.
 Protecting the reputation and public image of the organization.
 Enhancing the ability to prepare for various circumstances.
 Assisting in clearly defining insurance needs.
 Protecting the environment.
 Protecting people from harm.
 The pre loss and post loss risk management objectives are more easily attainable.
 The cost of risk is reduced, which may increase the company’s profits
 Because the adverse financial impact of loss exposures is reduced, a firm may be able
to enact a risk management program that treats loss exposure.
 Society also benefits since both direct and indirect (consequential) losses are reduced.
As a result, pain and suffering are reduced
 Reducing liabilities.

An effective risk management practice does not eliminate risks. However, having an
effective and operational risk management practice shows an insurer that your organization
is committed to loss reduction or prevention. It makes your organization a better risk to
insure.

CHALLENGES IN RISK MANAGEMENT

 Few legal structures
 Lack of historic data
 Lack of professionals
 Appreciation of the practice
 Lack of clear understanding

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 Few published professional materials

 It’s a dynamic phenomena/highly unreliable forecasts
 Its involving, a single mistake by a negligent individual may render useless the entire
process.

Trends in Risk Management

Here are business and technology trends that are shaping risk management in 2015:

1. CROs and CFOs

Prior to the recent financial crisis, there was often a lack of consistency between chief risk
officers (CROs) and chief financial officers (CFOs) across processes, systems and data. In
many financial institutions, the two sides were speaking a different language and
unintentionally creating challenges for the organization with conflicting priorities and
messages. Today, some aspects of the crisis have helped to push the agendas together, and the
trend is toward tighter alignment and collaboration between the CRO and CFO, resulting in
more consistency across finance and risk.

2. The importance of culture

Many organizations leave risk appetite as a concept and fail to translate this into limits and
specific direction. A risk culture is a set of guidelines and expectations from the top down on
appropriate risk taking and decision making. Both the CRO and chief human resource officer
should determine the proper training and discussions needed throughout the financial
institution to ensure that all employees understand their roles in managing risk.

3. Complexity
To manage the business, firms need risk management capabilities to support scenario
planning and risk mitigation, and they need information based on more than just a finance or
process perspective. They need to be able to look at different markets, customers and product
lines in a more sophisticated manner.

4. Geographical shift
Another change that has taken place is that risk management best practice is no longer
concentrated in the usual regional centers. Accenture's 2011 Global Risk Management
research shows that more than 90 percent of Latin American firms have existing enterprise
risk management programs in place, compared to only 52 percent of European companies and
60 percent of North American ones. Also, 90 percent of Latin American firms foresee
significant or moderate increases in risk management spending, compared to only 82 percent
of companies in North America and Asia Pacific. Ultimately, successful organizations will
look beyond regulation and cost-reduction and view risk management as a strategic element
of their value chain, delivering sustainable growth and innovation.

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Technology as an enabler
Over the years, data volumes, along with regulatory and business requirements, have driven
financial institutions to take a leading position in technology, developing new features and
sophisticated, automated solutions that cover more countries and business activities.
However, these requirements have also progressively contributed to a dramatic increase in IT
costs as demands have become more complex and the resulting systems more diverse. One
important technological change designed to meet the increasing demands is in the way that
the application architecture is built. Traditionally, the application landscape was built layer
upon layer. Each layer carried a function and interfaced with the others through
transformational rules, lead times, shortcuts, complex reporting rules, and so on. However,
that horizontal structure is changing to something much more vertical. Consequently,
individual pieces of information will be able to be gathered from the bottom up, elevating the
reporting lines and data governance where necessary.

Partnerships
This is beyond the traditional in-house versus outsourcing debate. Given the levels of
complexity faced by financial institutions, firms are likely to have little choice other than to
partner in new ways, including traditional competitors and peers, as well as IT and change
specialists. Given the recent level of investment in risk management, it will be critical for
CROs to demonstrate the benefits and tie the outcomes from risk management projects more
directly to business outcomes and tangible cost reductions. To achieve this, many
organizations are more actively seeking collaboration.

Executive representation
“For years, they have fought for acceptance by upper management to get their distinct
perspective and abilities absorbed into the senior decision-making process. Now, in light of
current events, more risk managers are taking their seat at the table, and are being tasked with
demonstrating how they can safeguard organizations and impact bottom-line performance on
a strategic level.”

Customized risk solutions

Sound risk management requires varied expertise from a lot of different types of people
across an organization. There’s no one perfect tool to analyze or mitigate any organization’s
risk. We’re seeing risk managers move beyond standardized rating systems and risk models
to adopt customized valuation tools that provide the transparency necessary to identify and
address the unique nature of risk found in their organizations. Risk managers are increasingly
expanding their expertise in to human resources, IT, security, legal, site construction — just
about everywhere there’s a solution needed. “For risk managers, it’s a time of uncharted
exploration and growth,”

It isn’t just risk managers that are developing custom solutions. Insurers hope to gain the
competitive advantage by delivering more personalized programs for their clients.

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4 Which three of the following insurance policy provisions could mean that something more
than indemnity is payable with claims?

(i) ‘New for Old’ cover

(ii) Agreed value policies

(iii) Reinstatement insurances

(iv) The condition of average

CORE FUNCTIONS OF AN INSURANCE COMPANY

Whilst an insurance intermediary is unlikely to have close contact with the internal
organization of insurance companies, it is good to understand something of their
infrastructure and to be aware of the various departments and personnel behind the marketing
process. These, in outline, are considered below. Please remember, however, that there is no
single system for insurance companies to follow, and therefore the suggested structure must
be seen as representative only.

PRODUCT DEVELOPMENT

Someone once said, ‘Insurance is not something that is bought, it is something that has to be
sold’. We shall recall this when discussing marketing and promotion (4.3 below), but to the
extent that it is true the whole exercise depends upon having something to sell. That
something may be described as an insurance product.

Some insurances, of course, are compulsory (e.g. third-party motor and employees’
compensation), but even with these classes the precise policy wording is not decreed by the
Government. Therefore, there is scope for flexibility in presentation (whilst the requirements
of Ordinances must be respected). With other classes of insurance business, Hong Kong is an
open and very competitive business environment. Insurers must therefore be efficient and
dynamic in preparing the products they ‘sell’. As an abbreviated summary, the Product
Development department/section of an insurer will be much occupied with:

(a) Individual product development: this is a never-ending process. With competitors eager
to learn and copy, it has been said that the unchallenged ‘lifespan’ of a totally new product is
very short, perhaps a matter of only a few weeks or months. After that time, the product has
been copied, adapted and frequently undersold.

(b) Product portfolio development: increasingly, producing a ‘package’ of cover, especially

for larger clients, has become sensible, even vital, in order to retain a competitive edge.

(c) Product research: we may think of this in three areas:

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(i) our own products: nothing is perfect beyond improvement.

(ii) competitors' products: we do not, and cannot, live in a vacuum. It is essential to know
what is happening in our market and ‘what we are up against’. Besides, they will have no
hesitation in ‘borrowing’ from us!

(iii) market trend: the needs of the general public.

CUSTOMER SERVICING

Sometimes described as Client Servicing, this section has a number of functions, and with a
particular insurer some of these may be carried out by other departments (such as Accounts,
Claims etc.). The general scope of its responsibilities is indicated by its name. It is to
provide a service to existing and potential customers/clients, and the duties probably include:

(a) Correspondence: enquiries of every imaginable kind are likely to be received, asking for
guidance and information. Sometimes, the enquiries will be totally unrelated to the
company's business; therefore, a degree of perception and tact will be required. It is quite
sure that the response a company gives to enquiries is very important.

(b) Public relations: the more formal aspects of this could be within the province of the
marketing people, but the way clients are dealt with profoundly influences a company's
standing in the eyes of the public.

(c) Documentation: requests for duplicate policies, amendments to existing policies, copies
of motor insurance certificates, etc. will probably receive at least their initial attention in this
department.

(d) Complaints: an area that must be seen to be handled fairly and promptly. This may
require considerable liaison with other colleagues/departments. It must also be remembered
that complaints may reach high levels of company management and receive media and even
Government attention.

MARKETING AND PROMOTION

The particular areas of responsibility include:

(a) Public Relations: as explained, this may overlap to some extent with Customer Services,
but the image of the company and its perceived standing in the eyes of the public is of great
significance. This wide-ranging activity will include:

(i) the co-ordination of all external communications;

(ii) the co-ordination of media enquiries and interviews;

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(iii) press conferences, to announce or explain things, as necessary;

(iv) preparing press releases and copy for trade and other journals.

(b) Promotions: organizing and coordinating their preparation and conduct.

(c) Advertising: closely interconnected with the above, this enormously important area
includes:

(i) selection of external agencies (if used);

(ii) the extent to which TV or other media are to be involved;

(iii) co-ordination of advertising campaigns;

(iv) expenditure analysis and control.

Note: Advertising is an area which could involve massive expenditure. Great care must
therefore be taken in its management and control. As one famous businessman said ‘Half the
money I spend on advertising is wasted. Unfortunately, I do not know which half!’

(d) Sponsorship: insurers are frequently asked to sponsor industry or educational projects.
Also, this is of course an important aspect of advertising, involving much time and probably a
considerable budget.

(e) Market research: obviously, continuous monitoring of one's present and potential market
is a vital element for a marketing department. This will seek to establish existing and
perceived needs and demands in respect of insurance products.

INSURANCE SALES

Very closely connected with marketing, there may be considerable overlap of activity, if
separate sections exist. The name, however, indicates the functions, which specifically will
include:

(a) Product liaison: it is vital that the closest co-operation exists between Product
Development, Marketing and Sales, for obvious reasons. Poor communication between
colleagues in this area could have disastrous results.

(b) Sales enhancement programmes: again, requiring co-operation with other colleagues, e.g.
Training and Marketing.

(c) Monitoring: it is important to keep abreast of results and trends. Again, much teamwork
with colleagues is required.

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UNDERWRITING

This may be defined as the selection of risks to be insured and the determination of the
terms under which the insurance is given. With non-life insurances, it also involves a
continuing process of monitoring results and individual risks, to see whether renewals should
be offered, and on what terms. Special features to note are:

(a) Life insurance: for individual life policies, underwriting is a once only exercise, since the
policy cannot be cancelled by the insurer and changes are only possible with the insured's
consent. Because of its crucial importance, life insurance underwriting is often centralized.

(b) General insurance: here the range of different cover is very wide and mistakes in
underwriting are not permanent, in the sense that policies will come up for renewal and their
terms be reviewed, and can even be cancelled if necessary. Therefore, much less centralized
underwriting is still affordable.

(c) Guidelines: whilst underwriting is at a ‘one to one’ level, there is obviously a need for the
preparation of underwriting manuals, rating guides and similar guidelines for staff. These
involve considerable research and development, again with much attention to trends and
results.

(d) Target risks: curiously, this term could mean highly desirable types of business (in Life
Insurance) or highly undesirable types of business (in General Insurance). In the former, of
course, this is business the insurance intermediaries should be encouraged to seek diligently.
In the latter, the term could mean large, hazardous risks, e.g. petrochemical plants.

Each insurer will have its own ideas about what constitutes desirable or undesirable risks.
Typically, however, in life insurance, healthy young professionals are likely to be desirable
contacts. In theft insurance, jewelry stores in Central Hong Kong may not be favored.

(e) Stop-lists: sometimes given other names, a ‘stop-list’ indicates those types of business
that should not be encouraged, or should be rejected if offered. Some examples may readily
come to mind, with different types of insurance, although not every insurer will have the
same opinions on this subject. Nevertheless, compiling such lists involves considerable
underwriting expertise, especially bearing in mind the sensitivity over discrimination of every
kind (see 7.3 below).

POLICY ADMINISTRATION

This is another departmental description that may involve overlap with other sections or
departments mentioned above or below. The general areas of concern here may be:

(a) General or Life insurance? this is a most important question, since the policy document
with each has a very different significance. With general insurance, technically there need
not be a policy (although there almost invariably is) and it is seldom necessary to produce the

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original policy document when making a claim. With life insurance, however, the contract is
non-cancellable by the insurer, and the policy documents are required to be produced at the
time of a claim.

(b) Life insurance policies: as mentioned above, these must be produced when a claim is
made. A mistake in a life policy is potentially much more serious than with General Business,
especially since the policy may be assigned to another person and/or used as collateral with a
loan and any assignees are expected to be relying on the veracity of the policy.

(c) New business procedures: especially with Life business (as noted) the process of
verification and checking, both for factual accuracy and errors in document preparation, is
very important. With any class of business, it is important that the policy should be prepared
and issued as efficiently and as impressively as possible, for reasons that are obvious.

(d) Other procedures: this topic embraces such matters as error handling, policy correction,
endorsement preparation and renewal procedures. With life insurance, once more, the great
importance of the actual payment of the first premium must be considered. In other classes,
the contract may commence without the receipt of a premium (often a non-marine policy
requires that the insured ‘has paid or agreed to pay the premium’). With life insurance, the
usual practice is that the existence of the contract depends upon the first premium being
received.

CLAIMS

Once more, there are significant differences between Life and General Business claims.
Specifically, the implications include:

(a) Life insurance claims: obviously, there will only be one death claim. It is quite essential
for the claims handler to check each claim with the utmost care, as all sorts of considerations
are involved, such as:

(i) possible disputes or complications, for instance, problems may arise when the primary
beneficiary cannot be traced, or more than one person lodges a claim as alleged assignees;

(ii) possible outstanding policy loans;

(iii) possible assignment, so that the claimant is not the original policyholder;

(iv) uncertainties over actual death or the identity of the deceased;

(v) dividend/bonus considerations with participating/with-profit policies.

For similar reasons to those pertaining to underwriting (see 4.5 above), life insurance claims
handling is frequently centralized.

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(b) General insurance claims: the range of different types of claims is much wider than with
life insurance. Also, it is quite possible that the amounts involved are enormous. Therefore,
equal care should be taken in verification, although most claims being relatively small, the
work is much more likely to be decentralized, sometimes with fairly junior staff having some
degree of authority in claim settlement.

[Example: Claims may be relatively trivial, such as the loss of a camera, or exceedingly
complex, such as a major explosion at a large power station.]

(c) Common features: there are two areas that must be the subject of attention in all
insurance claims. These are:

(i) Liability: is the insurer liable under the policy? When dealing with liability insurance, it
must also be ascertained whether the insured is liable at law to the third-party claimant.

(ii) Quantum: how much is payable with the claim? With life insurances, it is usually pre-
determined, but with other classes of business, this could involve complex and sometimes
bitter discussion.

(d) Significance: it has been said that an insurer stands or falls on the way it deals with its
claims. There is truth in the remark and the insurance intermediary will want to know and
feel confidence in the support he looks for in this are

ACTIVITIES

1 Insurable interest may be described as:

(a) possession of certain goods; .....

(b) the amount always payable for insurance claims; .....

(c) a legally recognized relationship to the subject matter; .....

(d) the interest payments due if the insurance premium is paid late. .....

2 For marine insurance, insurable interest is required:

(a) certainly at the time of loss; .....

(b) only when the policy is first arranged; .....

(c) only at the time the first premium is paid; .....

(d) only if this is specifically mentioned in the policy. .....

3 Which of the following are the types of breach of utmost good faith?

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(i) Fraudulent non-disclosure

(ii) Non-fraudulent non-disclosure

(iii) Non-fraudulent misrepresentation

(iv) Fraudulent misrepresentation

1. Risk may be described as the uncertainty concerning a potential loss. That potential loss may
be:

2. A risk which offers the prospect of loss only, with no chance of gain, may be described as a:

3. Which of the following statements concerning risk are true?

(i) All risks are commercially insurable.

(ii) Not all risks are commercially insurable.

(iii) The only remedy for any kind of risk is insurance.

(iv) Insurers may mean a number of things when talking about ‘risk’.

4 Which of the following may be considered as being among the secondary or subsidiary benefits
of insurance to Hong Kong?

(i) means of savings

(ii) source of employment

(iii) encouragement of economic development

(iv) reduction in number of accidents/losses

Teaching / Learning Methodologies

Lectures, class discussions, demonstrations, Simulations, Small group work, practical’s, self-directed
learning

Instructional Materials and Equipment

Computer and internet

Course Assessment
End of semester Examination=70% (One 2 hour sit in examination)
Continuous Assessment Tests (CATs) = 30% (1 hour sit in test 20%: take away assignment 10%)

References
1. Mishra, M.N. & Mishra, S.B. (2010) Insurance: Principles & Practice. S. Chand; New
Delhi
2. Skipper, H.D. & Kwon, J.W. (2007). Risk management and insurance: Perspectives in a
global economy. Wiley-Blackwell

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3. David H., Ruth M., (2007). Understanding and Managing Risk Attitude. Gower
Publishing, Ltd.
4. Hubbard, Douglas (2009). The Failure of Risk Management: Why It's Broken and How
to Fix It.
5. Craig T., Erik V., (2002). Acceptable Risk Processes: Lifelines and Natural Hazards.
Reston, VA Crockford, Neil (1986). An Introduction to Risk Management, 2nd Edition.
Cambridge, UK.
6. Kowert A., Hermann, M.G. (1997). "Who takes risks? Journal on Conflict Resolution.
7. Mark S. (2007). Introduction to Risk Management and Insurance, 9th Edition. Prentice
Hall

Journals

1. Risk Management and Insurance Review

http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1540-6296
2. Journal of Risk and Insurance http://journalofriskandinsurance.smeal.psu.edu/

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