Risk Management and Insurance

Chapter 1 Introduction to Risk 4. Differentiate between a peril（风险事件）and a hazard（风险因素）and give an example of each. (P9)

A peril is a specific contingency（意外事件）that may cause loss.

Examples of perils include fire, windstorm（暴风）, collision（冲突）, war, etc.

A hazard is a condition or situation that makes it more likely that a peril will occur.

Examples of hazards include oily rags（油布）, icy roads, a dishonest employee, a careless driver, etc. Hazards include:

? Physical hazards（物质风险因素）, like ice on the sidewalks, smoking, or skydiving;

? Moral hazards（道德风险因素）(most of which are avoidable), like dishonesty (such as burning

down the warehouse（仓库）when your company goes bankrupt（破产）to collect insurance money or buying insurance on someone with yourself as beneficiary（受益人）and then killing them); ? Morale hazards（心理/行为风险因素）, like a careless attitude since “insurance will pay for it” .

5. Classify each of the following hazards as physical, morale, or moral. (P9-10)

a. A careless driver;

b. A person who suffers an exaggerated（夸张的）case of whiplash（脖子扭伤）following an automobile

accident;

c. A worker who occasionally leaves a dangerous machine unattended to talk with friends;

d. An employee who occasionally embezzles（挪用）money;

e. Icy road conditions.

a: Morale; b: Moral; c: Morale; d: Moral; e: Physical.

6.Define（定义）risk management and identify（识别、确定）the four steps in the risk management process. How does enterprise（企业）risk management differ from the traditional form of risk management?（P13.10）

Risk management is the process used to systematically（系统地）manage exposures to pure risk. The four steps in the process are ① identify risks, ② evaluate risks, ③ select risk management techniques, and ④ implement（执行、实施）and review decisions.

Traditionally, risk management has dealt primarily（首要地）with pure risks. Enterprise risk management considers all of an entity’s risks（实体风险）together, both pure and speculative（投机的）.

8. ABC Company owns 10,000 cars and has determined that it is very likely to suffer between 60 and 70 collision losses this year. XYZ Company also owns 10,000 cars and has determined that it is likely to experience 50 to 80 collision losses this year. Compute the degree of risk for each company, assuming that the companies expect to suffer 65 losses each. (P11)

RiskABC=(70－60)/65=15% RiskXYZ=(80－50)/65=46%

11. Company A owns 100 buildings and averages 2 fires per year. Company B owns 1,000 buildings and averages 30 fires a year. Company A never experiences more than 3 fires a year, although in some years there are none. In some years Company B has as many as 36 fires but never has fewer than 24. Who is faced with the greater objective risk? Who has the greater chance of loss? Explain. (P11) RiskA=(3－0)/2=150% RiskB=(36－24)/30=40%

A is faced with the greater objective risk;

ProbabilityA=2/100=0.02 ProbabilityB=30/1000=0.03

B has the greater chance of loss.

Chapter 2 Risk Identification（识别）and Evaluation（评估）

1. List and briefly describe three methods of identifying risks. (P16-18)

One method uses loss exposure checklists（遭损风险核对表）that list various specific sources of loss. Another is the financial statement（财务报表分析）method that involves analyzing each item on a firm’s income statement（损益表）and balance sheet（资产负债表）regarding risks that may be present.

A third method uses flowcharts（流程图）to map out the physical flow of goods. Flowcharts can be analyzed with respect to（关于，对于）the types of risks that may affect goods at each point.

5. PTY Company has experienced the following numbers of losses in the past 10 years: 3, 4, 3, 3, 1, 0, 2, 2, 3, 3. Calculate the mean, median, mode, variance（方差）, standard deviation, and coefficient of variation for this loss experience. (P20-23)

Mean（average平均值）: (3+4+3+3+1+0+2+2+3+3)/10=24/10=2.4

Median（中值）: 3 (Median is the midpoint in a range of measurements.)

0 1 2 2 3 3 3 3 3 4 (the average of the middle double 3)

Mode（众数）: 3 (Mode is the value of the variable that occurs most often in a frequency distribution.) Variance（方差）:

[(3－2.4)2+(4－2.4)2+(3－2.4)2+(3－2.4)2+(1－2.4)2+(0－2.4)2+(2－2.4)2+(2－2.4)2+(3－2.4)2+(3－

2.4)2]/10=1.24

Standard deviation（标准差）

Coefficient of variation（差异系数standard deviation/mean）: (1.11/2.4)×100%=46.25%

6. MDC Corporation’s losses are assumed（假定）to be distributed normally（正态分布）, with a mean of $10,000 and a standard deviation（标准差）of $2,000. Calculate the probable range of losses, given that the MDC risk manager desires 99 percent confidence in the estimate（估计）. How would the range change if only 95 percent confidence was needed？ (P23-24)

About 99% of all observations should be within 3 standard deviations of the mean.

Range of the losses: mean±3 standard deviations=$10,000±3×2,000=$4,000~16,000

About 95% of all observations should be within 2 standard deviations of the mean.

Range of the losses: mean±2 standard deviations=$10,000±2×2,000=$6,000~14,000

8. QAZ Company owns a fleet of（一队…）100 automobiles, for which the probability（概率）of loss is approximately（大约）equal to 0.05. Use the Poisson distribution（泊松分布）to estimate the probability that QAZ will suffer two or fewer auto accidents next year. (P24)

Number of exposure units = 100

Probability of loss = 0.05

mre?mp?r!

Chapter 3 Property and Liability Loss Exposures

3. What types of losses do bodily injury liability（责任）and personal injury liability cover? (P36-37) Bodily injury（身体伤害）: medical services（医疗服务）, loss of income（收入损失）, rehabilitation costs（康复支出）, loss of services, pain and suffering damages（疼痛和痛苦赔偿）, punitive damages（惩罚性赔偿）, etc.

Personal injury（人身伤害）: libel（中伤）, slander（诽谤）, invasion of privacy（侵犯个人隐私）, false arrest（非法拘留）, etc.

10. The owners of a swimming beach were sued（要求）by the parents of a boy who drowned when he swam into deep water and the lifeguard failed to reach him in time to save him. The plaintiffs（原告）argued that the defendant（被告）beach owners should have had more lifeguards（救生员）. The defendants tried to prove that they had enough guards for normal needs and that boy was guilty of（是…的过错）contributory negligence（共同过失）in swimming out into deep water, which, rather than the absence of a sufficient（足够的）number of lifeguards, was the cause of his death (Spiegel v silver Beach Enterprises, 6 CCH Neg. 2d 874). (P38-39、P47)

a. Decide who should win this case. Why?

b. How does this case illustrate（阐明）the basic requirements of a negligent act（疏忽行为）?

a. The defendant won the case because the plaintiff failed to establish proximate cause（建立近因）. b. The case admirably（极好地）illustrates（阐明）that there must be a direct connection between some negligent act and the cause of death, accident, or injury. Even if there had been a lifeguard handy（便利的）, his or her presence would not necessarily have saved the boy’s life. The case also illustrates assumption of risk（承担风险）.