THE FOLLOWING TWO CASE STUDIES ARE FOUND AT THE END OF THE RISK MANAGEMENT CHAPTER. I HAVE REPRODUCED THE TWO CASES FOR THE INSTRUCTOR AND HAVE PROVIDED RUNNING COMMENTARY FOR A SUGGESTED ANSWER WITHIN THE TEXT OF THE CASE. CLEARLY, THIS IS NOT AN ANSWER IN EXPOSITORY FORM THAT YOU WOULD EXPECT FROM A STUDENT BUT IT PROVIDES THE POINTS THAT SHOULD BE TOUCHED ON IN ANY INTELLIGENT AND FAIRLY COMPLETE ANSWER.
Texas Bank Tornado
In March 2000, at 5:30 p.m., a tornado hit several major buildings in downtown Fort Worth, Texas. Among the buildings damaged by the windstorm was a tall glass tower that a large bank had leased mostly for administrative offices for its 600 employees, but that also had public banking facilities on the lower floors. Because the tornado hit just after the end of the workday, there was no loss of life, but property damage to the building and its contents was extensive. Since the ...view middle of the document...
This facility provided workspace for about one-third of the bank’s critical personnel. The bank’s risk manager also made arrangements for a shuttle bus service between the loss location and office space available in nearby Dallas, Texas. Employees were not able to retrieve critical papers from the loss site until two weeks after the tornado struck, by which time the glass windows in the tower had been replaced or boarded over with plywood.
The company had planned to replace all the destroyed furniture, carpeting, and electronic equipment, as well as repaint its entire premises before reoccupying the damaged property. While the building was unusable, the bank had to find and rent alternate locations for many of its employees. It also had to continue the expensive shuttle service to Dallas and to provide many employees with an allowance for their commuting expense. In addition, the bank experienced much inefficiency, such as the inability to hold needed conferences and meetings that would normally have taken place in the damaged location. Perhaps the greatest complication arose when the building owner declared that it was too expensive to repair the building and therefore it was terminating all the leases. Leasing the same amount of space in a new location would likely cost the bank about twice what it had been paying at the damaged location.
Based on the information provided, you are to complete the following assignments:
1. Identify all the direct losses the bank experienced.
2. Identify all the indirect losses the bank experienced.
3. In a maximum probable loss event arising from a tornado, identify the additional losses that you would expect.
4. How could the bank’s risk manager use each of the following risk management tools in this case?
a. Risk assumption
b. Loss Prevention
c. Loss Reduction
e. Risk transfer
Case study (Due May 1, 2015)
1. Answer all the questions.
2. Total number of words 800.
3. Plagiarism is strictly prohibited.
4. Late submission will not acceptable.