Risk Management Question Paper

Risk Management

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY

INSTITUTE OF OPEN LEARNING
UNIVERSITY EXAMINATIONS 2008/2009
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BMS 202:
RISK MANAGEMENT

DATE: MONDAY 5TH JANUARY 2009
TIME: 2.00 P.M. – 4.00 P.M.

INSTRUCTIONS:

Answer Question 1 and any other TWO Questions

QUESTION 1

Eastlines is a public service transport firm with a fleet of 300 vans. The vehicles ply
between Nairobi, Mombasa, Kisumu and Eldoret ferrying passengers under the ‘prestige’
class. It has employed 350 drivers and at any time one vehicle has only one driver. The
firm is also involved in the transportation of parcels to various destinations in Kenya
.
a)
Clearly identify the risks facing Eastlines.

(5 marks)

b)
Recommend appropriate risk control measures that can be instituted by Eastlines
with specific reference to reduction, retention and transfer.
(10 marks)

c)
In Wakwetu Comapnmy, the likelihood of an accident is 03 the likelihood of this
accident involving a small car, van or bus is 0.2, 0.3 and 0.5 respectively.
Irrespective of the type of vehicle involved, the accident could be fatal or non-

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fatal. The likelihood of a fatal accident of a small car is 0.3; fatal accident of a
van is 0.5 and fatal accident of a bus is 0.2. Determine the likelihood of:

i)
A small car accident and it being fatal

(3 marks
ii)
Having an accident of the van.

(3 marks)
iii)
Having a bus accident and it being non-fatal.

(3 marks)
iv)
Having a van accident and it being fatal.

(3 marks)
v)
having a fatal accident of anything other than the van.
(3 marks)

QUESTION 2

a)
Explain the techniques that can be used in the identification of risks that a
business organization may be facing.

(10 marks)

b)
Giving relevant examples, discuss the ways in which risks can be classified.

(10 marks)

QUESTION 3
a)
‘Insurance has its own limitations as a tool of risk management’. Discuss this
statement with specific reference to criticisms advanced.
(10 marks)

b)
Explain the role of the insurance broker in risk management and insurance in
particular.

(10 marks)

QUESTION 4
Nakale, a huge multi-national company is considering starting a subsidiary dedicated to
underwriting risks of the parent group. You have been approached as an expert in risk
management to advise on the reasons necessitating the establishment of captives.
(20 marks)

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