Study 5 - Intro to Risk Management and Commercial Lines Insurance C72

Study 5 – The Case Study Approach

1.     What four methods of risk analysis are especially mentioned in this study? (p. 2)

1.     Physical inspections

2.     Financial Statement analysis

3.     Flow charting of operations

4.     The use of checklists

2.     Review the comments under “Surveys.” (p. 2)

        The purpose of a survey or questionnaire is to provide a through and systematic framework for exposure identification.

        While questionnaire are very useful risk management tools and probably should be used in all cases, they do suffer from one inherent flaw.  A questionnaire must be designed to be used for a wide variety of business firms.  This approach is satisfactory for most small businesses because small businesses tend to have relatively little variation in their operations.  Larger firms tend to have much more variation, even if they are in the same industry.

3.     What points arise from an examination of the flow chart for Versatile Adapter Corporation (VAC)? (p. 3)

        In applying the flow chart method, the producer draws a chart showing the flow of labour, materials and other production factors through the firm, from supplies to customers, and the flow of money through the firm in the opposite direction.

        Through the use of the flow chart, the producer can examine the firm’s operations systematically, step by step, in search of loss exposures.

4.     Review the comments under the heading Financial Statement Analysis. (p. 4)

5.     Review the case study for Joyner Sales and Service Corporation.  Allow yourself sufficient time to do so thoroughly.  Make a note for your own purposes of what you consider particularly important exposures requiring attention. (p. 3)