Lesson 3 - LESSON 3: Risk Management 1 Risk Management What...

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1 LESSON 3: Risk Management
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2 Risk Management What is Risk Management (RM)? Logical development and implementation of a plan to deal with potential losses Manage loss exposure Protect its assets A loss exposure is any situation or circumstance in which a loss is possible, regardless of whether a loss occurs E.g., a plant that may be damaged by an earthquake, or an automobile that may be damaged in a collision Making pre-loss arrangements for post-loss resources The logical approach to financing and controlling loss exposures
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3 The RM Function The staff varies based on size and responsibility All firms and people engage in risk management Career opportunities in profit and non-profit organizations Occupation is professionally recognized – RIMS – Risk and Insurance Management Society
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4 Occupational Opportunities Insurance expert: reinsurance, broker Financial risk manager: derivatives Claims Loss control: aftermath Employee benefits specialists Financial analysts Loss control engineers Attorneys
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5 RM Statement of Objectives and Principles Distinguish between pre-loss and post-loss objectives Pre-loss objectives Survival and growth Compliance with government regulations Efficiency Reduce anxiety Procedures and principles are implemented and followed
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6 RM Statement of Objectives and Principles Post-loss objectives Survive the loss Provide a foundation to grow and prosper Behave responsibly as a good corporate citizen Customers Environment Employees Communities Risk Management Manual Written to articulate goals, standards, how to measure results and provide benchmarks
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7 Steps in the Pre-loss Risk Management Process Choose most efficient tool(s) for Loss Control Loss Financing Implement and review
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8 Exhibit 3.1 Steps in the Risk Management Process
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Step 1 - Identify What to identify: Direct losses Indirect losses Key personnel Operations How to identify Balance sheet Income statement Other records Checklists Flow charts Questionnaires
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Lesson 3 - LESSON 3: Risk Management 1 Risk Management What...

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