Question

1. ABC Insurance Company utilizes the company’s risk control department services. The underwriter, Tim, received an application for property and liability insurance from Best Manufacturing. Tim googled the applicant and found some interesting information stated on the internet. There was a lawsuit filed against Best Manufacturing for a serious injury by a person using Best Manufacturing lawnmower. There was a second suit for injury to a child by a Best Manufacturing hedge clipper. There was also a press release about a new product, the easy to use chain saw. The application did not show any of this information. The application did state that there was one worker death two years ago, due to electrocution.

Best Manufacturing is located in California. When Tim looked at an aerial view of their five buildings he saw that the buildings were surrounded by deteriorating roads and buildings, many looked unoccupied. Provide a detail explanation of how Tim should utilize risk control to understand the applicant’s business and risks associated with Best Manufacturing.

Answer 1

Risk control is the simple way to asses risk, evaluate it , be aware of potential losses and take necessary steps or action to reduce or eliminate suc risk or hazards. We will try to identify potential risk factors assocaiated with Best Manufacturing which would include both technical and non technical factors and eliminate the same.

Tim must first do the risk assetment of Best Manufacturing and find out the risk associated with each and every segment of the business.

• Tim must try to analyse the physical risk associated with the business of Best Manufacturing by having a inspection of their building and factories, any fire or explosion could cause hazard to the employees and the building or factories must have a safe working environment for the workers.
• Tim should also check with Best Manufacturing what material they are using and asses the risk associated with the same, hazarious material can cause accidents which could be disasterous, this could be any acid , toxic gas or dust.
• Tim should also look into the s location of Best Manufacturer , he already found that roads and builidings around Best Manufacturer, which were in bad shape and uncoccupied, Tim should also look for other factors such as flood, tornados or other natural disaster effecting that area or not.
• Tim should also look for any human risk associated with Best Manfucaturing or not, these could be drug abuse by emlpoyees or works or could be regarding any frauds committed by any employee or not.
• Tim should aslo assess the technological risk such as power outage that is the most common technology risk. Auxiliary gas-driven power generators are a reliable back-up system to provide electricity for lighting and other functions. Manufacturing plants use several large auxiliary generators to keep a factory operational until utility power is restored.
• Tim should lastly, look into the strategic risk associated with Best Manufacture and may include there business plan and risk associated with if such plans fails to reach desired objective. Tim can Identify this risk by looking to financial statements and press realease regarding decisions made by the board during any general meeting.

After identifying the risk , Tim must do a assesment of such risk know the chances of occurance :

1. Very likely to occur

2. Have some chance of occurring

3. Have a small chance of occurring

4. Have very little chance of occurring

This can be done by statistical tools to know the probability of such risk and make action plan accordingly.

After knowning and assesment of risk Tim should put in place action plans to insure against all such risk, this could be by having insurance to protect the company from any physical damage and having health insurance for workers and employees so that they can be protected from any disasters. Proper safely checks and measurement should be taken for employees, worker and proper maintainance of equipment and other machines should be done. Also training and awareness should be provided to all workers and employees so that all safe protocols and high product quality is maintained which is hazardeous to any client or customers.