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Buss 324: Risk Management Question Paper

Buss 324: Risk Management

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2010

FACULTY : BUSINESS AND MANAGEMENT STUDIES
DEPARTMENT : BUSINESS ADMINISTRATION
TIME : 2 HOURS
INSTRUCTIONS Answer Question ONE (compulsory) and any Other TWO Questions

Question 1
a) Business Firms face a number of speculative financial risks. Define financial risk management. Discuss any 3 Speculative financial risks and explain how such risks can be managed. (10marks)
b) Michael owns a small plane that flies on weekends His insurance agent informs him that his plan was excluded under the home owner policy. As an insured, he feels that his plane should be covered just like any other personal property he owns. Explain to Michael the rationale for excluding certain types of properties (10marks) c) Using practical examples discuss the major social and economic burdens of risk to the society (10marks)

Question 2
The Dotcom Company has 500 sales representatives who drive the company cars. The company risk manager has recommended to the firm’s management to implement a partial retention program for collision losses of company cars. a) Explain the advantages and disadvantages of a partial retention program to the company. (8marks) b) What are the possible methods that can be used to pay collision losses from cars should retention method be adopted? (8marks) c) Identify two risk control measures that could be used by the company in their partial retention measures for collision losses. (4marks)

Question 3
a) Discuss any 5 principles that are essential for the formation of a binding insurance contract. (5marks) b) Briefly explain 5 types of deductibles present in an insurance contract. (15marks)

Question 4
a) Explain the concept of captive insurer clearly bring out the reasons for its formation. (10marks)
b) Discuss any 5 tools that a risk manager can use to identify all risks inherent in an enterprise. (10marks)

Question 5
Write short notes on any 4 of the following;
a) Pre and post loss objectives
b) The 5 Cs of credit risk management.
c) An insurable risk.
d) A peril and a hazard
e) Named perils cover and all risk cover (20marks)

Buss 324: Risk Management Question Paper

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