BUSI 2601 Lecture Notes - Lecture 10: Uberrima Fides, Liability Insurance, Property Insurance
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Risk management insurance: risk ma(cid:374)age(cid:373)e(cid:374)t (cid:272)o(cid:374)(cid:272)e(cid:396)(cid:374)s itself (cid:449)ith the ide(cid:374)tifi(cid:272)atio(cid:374), e(cid:448)aluatio(cid:374), (cid:373)o(cid:374)ito(cid:396)i(cid:374)g a(cid:374)d prevention of loss, it is a (cid:271)(cid:396)oad field a(cid:374)d i(cid:374)(cid:272)ludes the (cid:373)a(cid:374)age(cid:373)e(cid:374)t of, fo(cid:396) e(cid:454)a(cid:373)ple, da(cid:373)age to p(cid:396)ope(cid:396)t(cid:455) (cid:894)fi(cid:396)es, vandalism etc. Step 3: devising the plan: option a: risk avoidance. For example, a company decides not to expand production into nigeria because of the terrorist risk to staff (non legal and legal risks) and the risk of staff engaging in corruption to achieve business goals there. Introducing policies, practices and procedures to reduce the probability of a risk occurring or mitigating the impact if a risk materializes. For example, a company decides to expand production into nigeria, and hires a private security firm and implements a rigorous anti- corruption policy. The latter will dissuade employees from bribing and, if they do any way, reduce the sentence of the firm and help exonerate senior management and the board from prosecution.