Question

Risk managers use a number of methods for managing risk. For each of the following, what method for handling risk is used?Explain your answer.

a. The decision not to carry earthquake insurance on a firm's manufacturing plant

b. The installation of an automatic sprinkler system in a hotel.

c. The decision not to produce a product that might result in a product liability lawsuit.

d. Requiring retailers who sell the firm's product to sign an agreement releasing the firm from liability if the product injures someone.

Answer 1

Answer:-

a).

Risk-maintenance (suspicion) strategy applies here as the manager accept that purchasing quake insurance is unreasonably costly for this risk. This risk management strategy is likewise called self-insurance because of the significant expenses brought about in business insurance and non-accessibility of private safety net providers covering seismic tremor harms

b)

The Risk decrease of misfortune avoidance risk management technique is applied here to limit the impact of mishaps and cost of the misfortune. The manager utilizes a building approach (setting up the inn condition utilizing sprinkler strategies) to keep misfortunes from fire by introducing a sprinkler framework in this manner diminishing harm to the property (inn)

c)

The risk avoidance technique is applied here to keep away from the risk of lawsuit by not creating the product dispensing with the legitimate risk. The financially savvy building risk management approach is utilized in the risk avoidance strategy to abstain from manufacturing products that may bring about lawsuits

d)

Latent risk maintenance or supporting technique for risk management is applied here to impart the risk of the product to the buyer. Think about the instance of speeding in a bicycle and meeting with a mishap.

Here the bicycle manufacturer isn't at risk as the mishap happened due to over speeding and is viewed as a human mistake (manager utilizes the conduct approach of detached risk maintenance to cover the misfortune happening because of human blunder)

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