Risk Management & Insurance
Gursharan Deep Singh
Q1-We have studies how firms evaluate various risks and risk management techniques. Identify the risks and describe the techniques?
Answer- Risk has been defined as uncertainty concerning the occurrence of loss.
Various types of risk faced by firms are as follow:
1.property risks: The risk of damage to business property due to natural disasters like flood, earthquake. Tornadoes, fires and other perils.
2.Liability risks: In this company is sued for numerous number of reasons such as injuries to customer, discrimination against employees.
3.pure and speculative risk: pure risk is ...view middle of the document...
Various techniques used by firms to evaluate risk-
1.Avoidance: or e.g. we can avoid taking business in high crime rate area.
2.loss control: loss control includes various activities that reduce risk. Activities have two major objectives:
* Loss prevention: for e.g. auto accidents can be reduced by taking safe driving course.
* Loss reduction: for e.g.-department store can install sprinkler system to reduce severity of loss.
3.Retention: It means business or individual retains part of all financial consequences of given risk.
4.Self-insurance: Another name of it is self funding, it is special form of planned retention in which part or all of given loss exposure is retained by the firm.
5.Non-insurance transfers- In this risk is transferred to party other than insurance company.
Methods of transferring risk are as follow:
* Transfer of risks by contracts
* Hedging price risks
* Incorporation of business firm
Q2-what do you understand by integrated risk management? Answer-Integrated risk management is the integration of the management of risk at each level of management into all business and strategic planning and decision-making processes.
Integrated risk management brings together all risks that impact on each level of management. It means:
* Making staff identify the likelihood and consequences of activities
* Finding risks that impact on strategic and operational outcomes
* Making decisions about the best way to achieve objectives
* Targeting resources appropriately towards high-rating risks
The purpose of the Integrated Risk Management Framework is to:
* Provide guidance to advance the use of a more corporate and systematic approach to risk management;
* Contribute to building a risk-smart workforce and environment to protect the public interest, maintain public trust, and ensure due diligence; and
* Propose a set of risk management practices that departments can adapt to their specific circumstances and mandate.
Q3-Caerfully and critically evaluate the progress of the implementation of the Dodd-Frank Act?
Answer: The Commission has proposed or adopted following rules in connection with the Dodd-Frank Act. That Act contains more than 90 provisions that require SEC rulemaking, and dozens of other provisions that give the SEC discretionary rulemaking authority. Of the mandatory rulemaking provisions, the SEC has proposed or adopted rules for more than three-quarters.
The Commission has put in place a foundation for a framework that will
* support an entirely new regulatory regime designed to bring greater transparency and access to the securities-based swaps market,
* adopted rules that will result in increased oversight and transparency around hedge fund and other private fund advisers gave investors a say-on-pay regarding executive compensation and established a whistleblower program which offers incentives for individuals with...