IRM 3305 Risk Management Theory and Practice Fall 2014 Project Requirements: I. Teams a. 16 Students split into 3 teams . II. Weighting a. The Project is 30% of your grade. i. The presentation will be attended by Dr. Braniff as well as industry professionals and representatives of the National Alliance. ii. Start divvying up duties now – last minute work shows during the presentation. iii. Practice! Practice! Practice! - part of your grade has to do with the presentation having been rehearsed. iv. This is a PROFESSIONAL presentation – since we’ll most likely have outsiders joining us, presenters must dress in a professional manner (no jeans, proper professional attire). v. This presentation should mimic what you would be comfortable presenting to your board of directors and your CFO, etc. vi. You will be graded on the information presented, as well as the professionalism of your presentation and your team assessment. III. Project Components: a. Executive Summary of your findings. The purpose of the executive summary is to summarize key points. i. Should include bulleted key points ii. Should include 1-3 graphs for visualization iii. No more than 3 pages (including graphs) iv. Make the summary part of the Power Point Presentation b. Power Point Presentation i. A visual presentation of the questions given to you for the project. ii. Needs to show application of information learned in class, not just a regurgitation of the questions and answers, I want to see critical thinking. iii. Presentations will occur on Monday, Nov 30 No exceptions, you MUST be present. Each group will present during this time (up to 30 minutes per group, at least 15). iv. ALL team members must present a portion of the project. c. All of the presentation documents need to be submitted to me. If you did not answer all of the questions in your power point presentation, I need to receive the answers in a document. IRM 3305 Risk Management Theory and Practice Group Project October 16, 2015 The Pebbles, Inc. GENERAL The Pebbles, Inc. (the “Company) is a casino & resort operating company based in Las Vegas, Nevada, USA. The Company’s resorts feature high-end accommodations, gaming and entertainment, convention and exhibition facilities, celebrity chef restaurants, and clubs. In the past several years, the Company has decided to add a couple of other types of businesses, the most profitable being the Spinout School of Racing in Monte Carlo and the Big Shark Surfing School in Sydney. The current primary properties are listed below: LAS VEGAS, NEVADA The Big Gambler Resort-Hotel-Casino - 05/03/1999 Non-Gambler Expo & Convention Ctr. - 02/01/2002 Pebbles Resort-Hotel-Casino - 12/30/2007 MONTE CARLO, MONACO Pebbles, Monte Carlo – Resort-Hotel-Casino - 05/18/2004 Spinout School of Racing - 06/14/2009 SYDNEY, AUSTRALIA Pebbles, Sydney – ResortHotel-Casino - 04/27/2010 Big Shark Surfing School - 04/27/2014 LAS VEGAS, NEVADA.

1. IRM 3305 Risk Management Theory and Practice
Fall 2014
Project Requirements:
I. Teams
a. 16 Students split into 3 teams .
II. Weighting
a. The Project is 30% of your grade.
i. The presentation will be attended by Dr. Braniff as well as
industry professionals and representatives of the National
Alliance.
ii. Start divvying up duties now – last minute work shows
during the presentation.
iii. Practice! Practice! Practice! - part of your grade has to do
with the presentation having been rehearsed.
iv. This is a PROFESSIONAL presentation – since we’ll most
likely have outsiders joining us, presenters must dress in a
professional manner (no jeans, proper professional attire).
v. This presentation should mimic what you would be
comfortable presenting to your board of directors and your
CFO, etc.
vi. You will be graded on the information presented, as well as
the professionalism of your presentation and your team
assessment.

2. III. Project Components:
a. Executive Summary of your findings. The purpose of the
executive summary is to summarize key points.
i. Should include bulleted key points
ii. Should include 1-3 graphs for visualization
iii. No more than 3 pages (including graphs)
iv. Make the summary part of the Power Point Presentation
b. Power Point Presentation
i. A visual presentation of the questions given to you for the
project.
ii. Needs to show application of information learned in class,
not just a regurgitation of the questions and answers, I want to
see critical thinking.
iii. Presentations will occur on Monday, Nov 30 No exceptions,
you MUST be present. Each group will present during this time
(up to 30 minutes per group, at least 15).
iv. ALL team members must present a portion of the project.
c. All of the presentation documents need to be submitted to me.
If you did not answer all
of the questions in your power point presentation, I need to
receive the answers in a document.

3. IRM 3305 Risk Management Theory and Practice
Group Project
October 16, 2015
The Pebbles, Inc.
GENERAL
The Pebbles, Inc. (the “Company) is a casino & resort operating
company based in Las Vegas, Nevada, USA. The Company’s
resorts feature high-end accommodations, gaming and
entertainment, convention and exhibition facilities, celebrity
chef restaurants, and clubs. In the past several years, the
Company has decided to add a couple of other types of
businesses, the most profitable being the Spinout School of
Racing in Monte Carlo and the Big Shark Surfing School in
Sydney. The current primary properties are listed below:
LAS VEGAS, NEVADA
The Big Gambler Resort-Hotel-Casino
- 05/03/1999
Non-Gambler Expo & Convention Ctr.
- 02/01/2002
Pebbles Resort-Hotel-Casino
- 12/30/2007
MONTE CARLO, MONACO
Pebbles, Monte Carlo – Resort-Hotel-Casino
- 05/18/2004
Spinout School of Racing

4. - 06/14/2009
SYDNEY, AUSTRALIA
Pebbles, Sydney – ResortHotel-Casino
- 04/27/2010
Big Shark Surfing School
- 04/27/2014
LAS VEGAS, NEVADA
The Big Gambler Resort, Hotel & Casino is the pride and joy of
Pebbles, Inc. There are over seven thousand spacious suites,
designer shopping, world-class dining, and incredible
entertainment. The location also includes a theatre where very
well-known acts perform year round. The venue has an
estimated seating capacity of 5,000. Typically, the theatre
books a resident performer for 9-12 months at a time. Most
recently, they signed on Brianne Smalle – a chart topping
twenty-five year old pop sensation – to begin performing in the
next 30 days. Unfortunately, Brianne has just been arrested
after a multi-state car chase. To make matters worse, when she
was finally stopped, the police found proof of major
involvement in an international drug ring. In addition to her
charges of DUI, she is now being accused of various charges
related to the drug ring including money laundering, drug
trafficking, human trafficking, kidnap and murder.
The Non-Gambler Expo & Convention Center was opened in
2002 to respond to the demands of the city. The Expo &

5. Convention Center boasts over 2 million square feet with
exhibit space of 1.5 million square feet. The location is central
and is walking distance from over 100,000 guest rooms. The
Convention Center is in the process of undergoing major
renovations in order to accommodate the technology needs and
desires of their guests and vendors. The intention was to
complete the renovations by the end of the summer.
Unfortunately, the main contractor, Trust Us Construction, is
three months behind schedule due to the main project manager’s
recent problems with gambling addiction. The convention
center has a major exposition scheduled in two weeks for Fine
China and Crystal of The World. The owner of the Center is
convinced that the expo will go on as planned, confident that
spare boards, exposed cords, drilling, hammering and multiple
construction workers walking through the expo will be a
minimal issue.
The Pebbles Resort-Hotel-Casino is located off the main strip
and is more a niche-casino, catering primarily to elderly tour
bus visitors. This particular resort considers itself the top
destination for their niche and offers many amenities geared
towards their elderly visitors. These amenities include several
medics and nurses kept on staff in case any issues arise with
their valued patrons. As a favor to a friend, the manager at the
resort has hired a new company, Slips R Us, to maintain the
safety of the resort. The first project for the group was to
replace all non-skid surfaces with new material. Luckily, the
owner of Slips R Us found a great deal on slightly-used, mostly
slip-resistant flooring that he can avoid taxes on by paying cash
– he’ll make a killing on this deal! MONTE CARLO
Similar to its sister-property, the Pebbles Resort-Hotel-Casino
in Las Vegas, the Pebbles, Monte Carlo caters primarily to
elderly visitors. The property is located directly on the coast
and offers many boating excursions for their visitors. In the
past, the excursions were led by a local captain. Unfortunately,
last year, he was fired for stealing money from the passengers
on a regular basis. Currently, most of the excursions are led by

6. local teenagers trying to make some extra cash. The manager
finds this a great fit as the elderly passengers enjoy the
perspective of the local youngsters, and the resort can hire the
teenagers for very cheap pay and offer them no benefits. All
teenagers are paid in cash at the end of the day.
The Spinout School of Racing was opened in June of 2009. The
Monaco Grand Prix is a Formula One motor race held on the
Circuit de Monaco since 1929. Many racing fans flock to
Monaco primarily for this event. The Spinout School of Racing
was born of the idea to let regular tourists learn to race like a
pro year-round! The school is primarily taught by retired Grand
Prix competitors. It has become known for the opportunity to
race in the streets of Monaco year-round – something no other
school offers. The school has recently contracted with a new
company, “Race or Die”, to maintain their vehicles. Race or
Die just began operating in the spring of this year and this is
their first big client; they are very excited.SYDNEY,
AUSTRALIA
The Pebbles Resort-Hotel-Casino in Sydney also caters
primarily to elderly visitors. Similar to its sister property in
Monte Carlo, it is very beautiful & located on the gorgeous
waters of Port Jackson. In addition to boating adventures, this
location also provides guests the opportunity to snorkel and
scuba dive. Similar to the Monte Carlo location, all of the
excursions are led by local teenagers. All teenagers are paid in
cash at the end of the day.
The Big Shark Surfing School is one of the newest endeavors by
The Pebbles, Inc. Since Australia is always associated with
beautiful water and wonderful surfing, The Pebbles, Inc. found
this a great opportunity to cater to some tourist desires. The
School is located in Sydney, but the attendees take busses to
various locations such as Bondi, Tamarama, Bronte or
Maroubra. The surf teachers are all local surfers who know how
to have a good time. Typically the school is an all-day affair –
attendees meet at the school, practice some moves, then the surf
teachers drive them in busses to the beaches to start practicing.

7. After a few hours out in the water, the surf teachers let loose
with their students and break open some Australian brews
before heading back to the school. Generally, the ratio is 1
teacher to 10 students, but with one of their prime instructors
being out due to a shark attack, the ratio is currently 1 teacher
to 17 students. All of the teachers are paid in cash at the end of
the day.OTHER OPERATIONS
The Company also owns one ten-passenger twin-engine airplane
that is piloted by various principals of the Company. The single
engine plane is hangered in Las Vegas and is used to give
preferred passengers tours. Also, the plane is often used to take
friends of the Company officers on entertainment trips.
INSURANCE AND RISK MANAGEMENT
The Pebbles, Inc. has multiple insurance policies that renew on
January 1.
Insurance Premiums:
$ 26,000,000.00
Retained Losses:
$125,000,000.00
Admin cost of RM Program & Department Cost
$1,250,000.00
The Pebbles, Inc. uses their broker as a consultant on their
coverage placement – they currently pay the broker on a
commission basis at a rate of 8% of insurance costs.
For the past three years, The Pebbles, Inc. has been contracting
their claims administration to a third party administrator who

8. charges 2% of their insurance costs to administer their claims.
The Pebbles, Inc. also does a regular review of their risk control
techniques and has spent $7,250,000.00 this year to control
risks.
Consolidated Balance Sheets
Income Statement
PART ONE:
For each of the designated areas of exposure (domestic
property, liability, contractual, net income, human resource and
international), complete the appropriate Exposure Analysis
Worksheet (next 3 pages).
1.
Identify a few exposures that you feel may be potentially severe
or frequent (or unique, which management might not have
considered yet) that The Pebbles, Inc. should address as part of
the risk management program.
2.
Determine a frequency and severity rating for each exposure
using the following scale:
FrequencySeverity
1-remote
A-slight
2-low

9. B-appreciable
3-moderate
C-serious
4-high
D-severe
5-probable
E-catastrophic
3.
Recommend at least one of the following risk control treatments
for each exposure identified
Avoid
Prevent
Reduce
Segregate

10. Transfer
Also suggest one SPECIFIC risk control technique that should
be implemented for each identified exposure.
4.
Draw a risk map depicting the exposures identified in (1.).
EXPOSURE ANALYSIS WORKSHEET
THE PEBBLES, INC.
DOMESTIC PROPERTY
Exposure(s)
Frequency/ Severity
Treatment
Specific Plan
LIABILITY
Exposure(s)
Frequency/ Severity

11. Treatment
Specific Plan
EXPOSURE ANALYSIS WORKSHEET
THE PEBBLES, INC.
CONTRACTUAL
Exposure(s)
Frequency/ Severity
Treatment
Specific Plan

12. NET INCOME / FINANCIAL ANALYSIS
Exposure(s)
Frequency/ Severity
Treatment
Specific Plan
EXPOSURE ANALYSIS WORKSHEET
THE PEBBLES, INC.
HUMAN RESOURCES
Exposure(s)
Frequency/ Severity
Treatment
Specific Plan

13. INTERNATIONAL EXPOSURES
Exposure(s)
Frequency/ Severity
Treatment
Specific Plan
PART TWO:
Based on the exposures identified in Part One, please provide
the following:
Property:
1. What property valuation methods would you recommend?
Liability:

14. Which method(s) would you recommend to identify the liability
exposures (Please name 2 per location)? Why?
Contractual:
Which method(s) would you recommend using to identify the
contractual exposures? Why? Give specific examples of both
the methods and exposures.
Net Income/Financial Analysis
1. Which method(s) would you recommend using to identify the
net income exposures? Why?
Human Resources
1. Which method(s) would you recommend using to identify the
Human Resources exposures? Why?
International Exposures
1. Are there any unusual international exposures that would
require special attention? What are they?
General
1. Are there any ethical issues facing The Pebbles, Inc.? What
are they? What do you recommend?
2. What is the Cost of Risk for The Pebbles, Inc.? Please create
a table showing how this was calculated.
PART THREE :
1. For each of the property exposures identified above, indicate
which Accident Prevention Basic you would recommend using
and why.
2. Using the eight key elements of Safety & Health Programs,
provide a description of a good safety and health program for

15. The Pebbles, Inc. and how you would implement the program.
Given their industry, The Pebbles, Inc. has a significant number
of walking surfaces. Please identify a maximum of 5 risk
factors and what type of hazard controls you would put in place.
PART FOUR:
1. Using the financial information provided above, please
complete the chart below for the most current year of data
Type
Ratio
Formula
Calculation
Benchmark
Liquidity
Current Ratio
1.5 & UP
Quick Ratio
1.00 & UP
Net Working Capital
Debt
(Please note that total debt is current portion of long term debt
+ long term debt)
Debt Ratio
.50 & DOWN

16. Debt to Equity Ratio
1.00 & DOWN
Profitability
Return on Assets
5%
Return on Equity
15%
2. For the ratios with benchmarking data provided, identify the
significance of the calculated value compared to the benchmark
value (i.e. is The Pebbles, Inc.performing better or worse than
industry). Has The Pebbles, Inc.improved over the prior year?
PART FIVE:
Claims Management
As noted in the original description, The Big Gambler Resort,
Hotel & Casino in Las Vegas has a theatre where resident
performers are regularly booked. There is typically a 60 day
gap between resident performers and, during that time, the
theatre hosts travelling shows that don’t have a regular
performance venue. The current act is a local rock band –
Ignite Me – who is very popular and has a penchant for using
heavy pyrotechnics between their sets.
At approximately 11:45 PM last night, Ignite Me completes a
rousing set of 80’s heavy metal. The lead singer, TNT,
proceeds to give the signal to the crew to start the pyrotechnics.
As soon as they begin, it is evident that there is a problem –
within a few moments, the stage is engulfed in flames. The
audience, used to a great Vegas show, thinks this is all part of
the act initially but eventually begins to panic and attempt to

17. find their way to the exits. The exit signs have been faulty
lately and only 2 of the 25 exits are clearly indicated. Chaos
ensues. Once TNT and Ignite Me realize that the theatre is
going up in flames, they exit the back of the theatre and hop
onto their tour bus. Their manager quickly grabs the contract
he has with the theatre and realizes that the section of the
contract addressing the pyrotechnics was accidentally left off of
this particular contract.
1. Specifically identify the steps The Pebbles, Inc. would need
to take to handle this event (using the Claims Management
process).
Crisis Management
2. Please identify the Crisis Management process that The
Pebbles, Inc. should follow. Briefly describe what each step
entails.
3. What should The Pebbles, Inc. do in the first 24 hours after
the fire?
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