PART B: ESSAY QUESTIONS Instruction: Answer ALL questions. 1. Irham Huzaimi acts
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PART B: ESSAY QUESTIONS Instruction: Answer ALL questions. 1. Irham Huzaimi acts as a new Risk Manager at Platinum Berhad. His main task is conceming the process of conserving the firm's earning power and assets by reducing the threat of losses as a result of uncontrollable events. So, in order to survive and prosper the Platinurm Berhad, Irham Huzaimi must understand how to manage risk in a cost-effective manner. i. List and explain TWO (2) types of risks and provide a related example. (6 marks) li. Discuss FIVE (5) steps of risk management process. (10 marks) ili. Differentiate between insurance premium and insurance policy. (4 marks) Total: 20 marks)Explanation / Answer
Question 1 : Types Of Risks
To compete the current market world the organisations in any field need to concentrate on reduction of risks to avoid future losses and to have positive sustainment over long life of a business.
Strategic Risk
Todays business environments are mostly risk filled , it is hard for management to come up with exact strategic plans to be execute according to the future market scenario.
Strategic risk emerges key focus on around market world and consider on important issues for success of the business
The strategic risk comes into the picture at the time of execution when the forecasted plan may differ from current market situation like
Effective strategic risk management can protect from potential downsides and minimise the risk of uncertainity and volatility which can help in creating better competitive position.
Example : The kodak which had great success and leading company at film photography in the past days. Kodak not good at strategic planning on sustaining the lead position , as failed to develop innovative models while some others started working on digital camera's eventually and get succeeded..Failure of strategic risk point led kodak backrupty
If we talk about xerox photocopier which led major success in the past days where occurance of laser printing is strategic risk to xerox . But not as kodak xerox adapted new technological skills and changed its model of business to survive at risk.
Financial Risk
Very important task of strategic management is to anticipate the financial resources where with out proper financial system it is hard to survive at the market world.The risks associated with finanace effect areas of
The business organisation the impact of financial risk can spread to all levels of the business in terms of Loosing revenue or extra cost to it.the category of this risk particularly at money flowing of inside and outside of the business. which can cause sudden downfall.
Sometimes in cases of having heavy debt also maximises the financial risk as shor term debt of paying 8% interest rate if suddenly the interest rates go up and need to pay 15% which is extra burden cost for business and this situation comes under financial risk.
Financial risks are higher at business on international basis because the rates of dollars changes frequently and lot of fluctuations at exchange of markets.
Question2
Risk management team is vital at every organisation to manage or to avoid the risks which effects the business success. risk management process can be evaluate by following steps
Identify the risks through inspecting the historical records of risk periods so that management can prevent the activities of risk choice. and can ask for suggestions or ideas of stake holders in order to identify the risk.
Once the risk was identified then further process is to analyse the risk , as causes of risk , effected areas of risk , resolving methods and best solution pick up
Analysation could be more efficient when the management discuss the risks along with stake holders.
From proper discussion and opinion pooling a set of risks to be listed in front of the management , so the management or risk reduction team have to mark up the ascending order of risks where prioritizing the risk which is top of the list and finding out the solution is the process of risk evaluation.
The risks which are in top need to get immdiate resolving actions in order to maintain organisation competitive advantage and to sustain success.
When the top listed risks underlined now management has to take necessary steps to reduce the risk area as designing proper plan to proceed with risk, anticipate the cost and manpower to resolve the risk . And come to the implementation process once the planning process is completed.
Once the plan was executed there should be one person or team to have continous monitoring on the process of risk reduction. so that the management can know how the process is going on or any further actions need to take to accomplish the task.
Question3
Insurance premium can be termed as the particular amount that an individual or business group need to pay for Insurance policy. The premium can be pay annually, semi annually, quarterly or monthly according to the customer choice and insurance pollicy instructions.
Insurance policy is a system that includes the process of insurance scheme from begining to its end. Insurance policy ensures the benefits of premium like medical, educational and home benefits.
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