Answer to Question #212500 in Management for DANI

Question

assignment of Risk Management and Insurance.

I) GIVE SHORT ANSWERS.

1) Briefly describes the classification of risk and mention with examples listed.

2)Obbo Teshome is the risk manager of Ethiopia insurance company in Dire Dawa he is to continue operating.For some firms the ability to operate after a severe loss is an extremely important objective. Especially, for government facilities firms such as banks, cocacola etc,they must continue to provide service. Otherwise, they may lose their customers to competitors. Which objectives risk management affects the firms .By supporting justification interpretation.

Answer 1

Part 1

Financial Risks

These are risks whose outcome of events can be quantified monetary for example a car being stolen.

Non-Financial Risks

These are risks whose outcome of events cannot be quantified monetary for example choosing a career such as being a teacher instead of a doctor.

Pure Risks

These are risks whose outcome at best is a break even scenario or a loss, for example a factory being damaged by a cyclone (Elzamly et al, 2015).

Speculative Risks

These are risks whose outcome poses an opportunity of making a profit or a gain, for example investing in shares.

Fundamental Risks

These are risks arising out of acts of nature for example floods.

Particular Risks

These are risks emanating from acts of people for example burglaries.

 

Part 2

Risk management can be defined as the process of identifying, analyzing, assessing, controlling and responding to potential risk factors that affect a business. Ethiopian businesses such as banks should identify potential risks that are likely to affect the business and also managers such as Obbo Teshome should come up with mitigation factors and also precautionary steps such as taking an insurance cover and hiring professionals who are well accustomed in dealing with risks to cushion the business from harm such as losing customers to competitors. It is the objective of the managers to have risk management objectives in the business setup.

 

References

Elzamly, A. and Hussin, B., 2015. Classification and identification of risk management techniques for mitigating risks with factor analysis technique in software risk management. Review of Computer Engineering Research, 2(1), pp.22-38.