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Dms 200 Insurance And Risk Management Question Paper

Dms 200 Insurance And Risk Management

Course:Diploma In Business Management

Institution: Kca University question papers

Exam Year:2014

UNIVERSITY EXAMINATIONS: 2013/2014
STAGE V ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DMS 200 INSURANCE AND RISK MANAGEMENT
DATE: AUGUST 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
a) Discuss four risk treatment strategies a firm can employ
b) Differentiate between
(i)
(c)
A Peril and a hazard.
(ii)
(4 Marks)
Pensions and annuities.
(4 Marks)
Discuss the principles of indemnity and its application in the insurance business
operations.
(d)
(2 Marks)
Ufanisi Document Technologies has been presented with two projects
Project A
Assumptions (states of nature)
Net Present Value Sh`000''
Probability
Pessimistic 1000 0.3
Moderately successful 3000 0.4
Optimistic 5000 0.3
Project B
Assumptions (states of nature)
Net Present Value Sh`000''
Probability
Pessimistic 900 0.1
Moderately successful 2000 0.4
Optimistic 7000 0.5
1
(i) ( 3 Marks)
(ii)
(e)
Find the Expected value of each project Compare the risks of the two projects using coefficient of variation. (3 Marks)
Insecurity in the country brought out by high incidences of terrorism, tribal clashes, high
political temperatures has led to decrease in economic activities in the country, food
insecurity and thus posing a great danger to the economy of Kenya . As a risk consultant
to the government, outline strategies that the government may employ to sustain its
economic life as well as restore investor’s confidence.
(4 Marks)
QUESTION TWO (20 MARKS)
a.
Explain using examples two principles of insurance and discuss any three circumstances
under which they may arise.
b.
(12 Marks)
There are several factors that limit individuals from insuring their risks with local
insurance companies. Discuss any such FOUR factors in the local scene.
(8 Marks)
QUESTION THREE (20 MARKS)
a.
With reference to a company that you well know of, describe the risks it’s exposed to
using:
i. (6 Marks)
ii.
b.
Macroeconomic Risk Analysis; Industry Risk analysis. (6 Marks)
Discuss the functions and benefits of insurance the company in regard to corporate risk
management.
(8 Marks)
QUESTION FOUR (20 MARKS)
a.
Discuss risk financing and risk transfer strategies that are mostly used in organizations.
(4 Marks)
b.
Given the following Expected values and Standard deviations for two projects. Compare
the risk of the two using the coefficient of variation.
(4 Marks)
Expected Value Standard Deviation
Project A 5,500,000 80,000
Project B 3,400,000 50,000
2
c.
Using the Porters Five Forces Analysis, discuss giving examples, the risk that an
organization may be exposed to.
d.
(6 Marks)
Using local examples and illustration demonstrate how the insurance mechanism, the law
of large numbers and the principle of expectation gap operate.
(6 Marks)
QUESTION FIVE (20 MARKS)
a)
Risk management process is a detailed plan that if well adhered to saves the organizations
many losses. Articulate in brief the risk management process that should be in place for a
manufacturing firm. What are the business consequences of not adhering to the process?
(12 Marks)
b)
Relate the unique problems of risk management as a discipline to the normal operational
management issues faced by business managers in today’s organizations.
3
(8 Marks)

Dms 200 Insurance And Risk Management Question Paper

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