Risk man 2012 individual assignment

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Risk man 2012 individual assignment

  1. 1. Risk Management and InsuranceAssignment InstructionsYou should attempt to answer any 4 questions from the 6questions presented below. In terms of length, I would say thatanything from 2 to 6 pages should be sufficient. I have given youextra time to complete the assignment but you should make surethat you email your answers to me by the following deadline.Deadline: Monday 7th May (week 19)email your answers to: dcgroup@fastmail.fmDaryl Chapman 16.04.2012Note: The questions are on the next page.
  2. 2. Risk Management & InsuranceAnswer any 4 questions from the following 6 questions:Question 1Assume that the chance of loss is 3 percent for two different fleets of trucks. Explainhow it is possible that objective risk for both fleets can be different, even though thechance of loss is identical.Question 2Although no risk completely meets all of the ideal requirements of an insurable risk,some risks come much closer to meeting them than others.Task A:Identify the ideal requirements of an insurable risk.Task B:Compare and contrast car collisions and war in terms of how well they meet therequirements of insurable risk.Question 3The law of large numbers forms the basis of insurance. Do you agree or disagreewith this statement? Explain your answer.Question 4The range of risks that mangers have to worry about today has certainly becomewider. Describe what you think will be the top five risks facing companies in 10 yearstime. How well generally do you think companies will be prepared to handle these topfive risks in the future?Question 5Since its early origins, Lloyd’s of London has developed certain importantcharacteristics. Briefly describe two of them. In addition, give your opinion as to howwell you think Lloyd’s of London has restructured itself to face the Insurance marketchallenges of today.Question 6To many people derivative financial instruments have become synonymous withfinancial risk. In fact, Warren Buffet, America’s most famous investor once describedderivatives as “financial weapons of mass destruction”. Do you think these rathernegative views of derivative financial instruments are justified? Explain your answer.

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