Risk Manager Can Make Optimal Use Of Insurance Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1268 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Recently, the subprime mortgage crisis and the European debt problems spread all over the world. Many companies were influenced by all kinds of problems and faced with risk loss. Therefore, corporate risk management becomes more and more important in operating business. Don’t waste time! Our writers will create an original "Risk Manager Can Make Optimal Use Of Insurance Finance Essay" essay for you Create order There are several kinds of risk management strategies. However, insurance is the most common and popular tool among these numerous strategies. In the crisis, many companies survived rely on the insurance. This essay will discuss the risk management and show the different types of risk management strategies. And it will focus on what the position of insurance is and how the risk manager makes optimal use of insurance as part of an overall risk management strategy. Risk management is identification, assessment prioritization risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events. Risk management solves the corporate risk, including price risk, credit risk and pure risk. Most big companies have a risk management department to deal with pure risk. And the risk manager is the leader of the department. The risk manager identifies loss risk, measures the probability of loss and chooses effect ive risk management strategies in order to maximize the corporate value. Risk Management Strategies Risk management strategy has mainly three parts, including risk control, risk financing and internal risk reduction. First of all, risk control is divided in loss prevention and loss reduction which mean risk manager increase ability of preventing potential loss and reduce the amount of risk events. Secondly, risk financing includes retention, insurance transfer, hedging and other noninsurance risk financing transfer. In retention way, corporate has its financing plan or establishes a captive insurance company. However, corporate can also buy an external insurance to transfer the risk. Using hedging method, corporate can sign contracts to reduce the loss when the price or exchange rate changes. Whats more, corporate can use the contracts to transfer the risk to other groups. Thirdly, internal risk reduction means corporate can prevent risk by itself, such as decentralising operating business or investing in an accurate future expectation. Insurance As the most common tool, insurance plays a significant role in corporate risk management. The shareholders are decentralised in many large companies. Although the corporate decentralisation reduces the risk as internal risk reduction, corporate receives more benefit from insurance. Insurance would reduce the cost of the claims processing and the loss control service and decrease the expected cost of loss control. It also decreases the probability of adopting the costly external capital for a new investment project and then increases the probability of accepting the new project. Whats more, it reduces the possibility of financing dilemma and the expected tax. In others small companies and private enterprise, the capital and shareholders are not decentralised enough. These companies are more risky than the decentralisation companies. Thus, insurance is necessary to reduce the potential loss. If risk occur, insurance is effective in risk averse and risk transfer. Otherwise, the compan ies will suffer great losses. However, insurance is not the best choice for every part of operating business. The insurance expense is always higher than the actual loss. If the risk manager buys the whole insurance, it would cost a large expenditure. It reduces the shareholder value which is against the risk management goal. The cost of risk is divided in expected cost of losses, cost of loss control, cost of loss financing, cost of internal risk reduction and cost of residual uncertainty. Insurance is a kind of cost of loss financing. If risk manager increase the cost of loss financing, the change in cash flow will decrease. It is bad for corporate operation. Make optimal use of Insurance Therefore, a risk manager should think over whether to purchase the insurance or not. The first step of risk management is risk identification. The risk manager can identify by analysing financial statements, discussing with department managers, having surveys with staffs and talking with insurance agents and risk management consultants. After risk identification, the risk manager should assess the probability and amount of risk. And it can be sorted out as a probability distribution. Then, the risk manager can divide them into controllable risk and Uncontrollable risk according to the probability. For controllable risk, the risk manager should consider whether it is low potential loss or high potential loss. The low potential loss is not necessary to purchase the insurance because the loss is too low that does not influence the corporate value at all when the risk occurs. Instead, the risk manager had better to make a financing plan which is a way of retention. At the same time , the manager can also use loss control strategy, such as using some feasible ways to reduce the probability and loss amount of the risk. For example, the corporate can fix the machine regularly and check the process more frequently. Through this strategy, the manager can save the insurance expenditure and reduce the risk from the change in insurance market. Moreover, it reduces the moral risk and prevents the excessive insurance cost and implicit tax. Finally, the fund can be used instead of become a cost. In addition, if it is high potential loss, the risk manager should purchase an insurance to prevent the large amount of loss. When the risk occurs, the risk manager can transfer the significant loss to the insurance companies. Otherwise, the corporate value will have a severe reduction. For uncontrollable risk and other unpredictable risk, insurance is necessary because it has a high probability of potential risk. Uncontrollable risk cannot be reduced by corporate actions. The refore, the risk manager should transfer the risk to the insurance company, avoiding the risk loss. Then the risk manager can make sure the corporate value isnt influenced by the risk loss. Additionally, some big companies establish a captive insurance company which is another kind of retention. The most important motivation of the captive is reducing expected tax. Besides, the captive can purchase reinsurance in one or more other insurance companies. Whats more, some special risks cannot be insured by external insurance companies or they are expensive. The captive can insure all the risk which the parent company is faced with. If the corporate has a captive, the risk manager can make a decision easily. The risk cost will reduce and the corporate value will go up. Furthermore, the risk manager should make an insurance plan for the employees. This insurance plan includes medical insurance, life insurance, disability insurance and dental insurance. It seems a large number of fun ds to purchase insurance for every employee. There is a sharing plan and non-sharing plan. The corporate reduce the wages of employees with sharing plan while it remains the original wages of employees with non-sharing plan. However, no matter using the sharing plan or the non-sharing plan, the insurance cost comes from the employees wages in the long run. With the employee insurance plan, both the corporate and the employees can reduce the tax expenditure. Whats more, the insurance plan can reduce the liquidity of employees and increase the productivity. Finally, the risk manager improves the corporate value. Conclusion In conclusion, insurance is a useful tool in risk management. The risk manager can make an optimal use of insurance by risk assessment. The risk of high potential loss and the uncontrollable risk should apply the insurance while the risk of low potential loss can be solved by a financing plan. Besides, some large company can establish a captive insurance company and then purchase reinsurance. Last but not the least, risk manager should purchase insurance for employees.

Race, Class, Gender And Sexuality Essay - 953 Words

An intersectional approach is an approach which seeks to demonstrate how race, class, gender and sexuality make certain experiences different. Intersectionality is the overlapping of social categories such as race, class, gender and sexuality that leads to further discrimination against a certain individual or group. To take an intersectional approach to understand race, class, gender and sexuality, is to consider hardships not as a similar element for all individuals without regards to race, but instead consider where in a specific hardship different races, genders, classes and sexualities are affected different. According to Crenshaw, â€Å"many of the experiences Black women face are not subsumed within the traditional boundaries of race or gender discrimination as these boundaries are currently understood, and that the intersection of racism and sexism factors into Black women’s lives in ways that cannot be captured wholly by looking at the woman race or gender dimension s of those experiences separately† (Crenshaw, 357). Crenshaw explains that the personal experiences of women of color cannot be fully understood by looking at race or gender discrimination as two separate factors, but in fact can be understood if both aspects are looked at together. When race and gender are examined separately, this causes for women of color to be â€Å"erased†. 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Environmental Scan free essay sample

Internal and external factors help an organization in the decision -making process of its future state. Internal factors surround strengths and weaknesses and external factors identify the potential threats and opportunities outside of the organization’s span of control. In this paper, the author will describe the research of internal and external environments of OfficeMax and Sprint. This paper will determine the competitive advantages of both companies and what each is using. It will determine how each company creates value and sustainability of competitive advantages through business a strategy. The paper will also explain the measurement guidelines that each organization is using to verify its strategic effectiveness and the effectiveness of the measurement guidelines. OfficeMax OfficeMax is a leading provider of office supplies, ink, office furniture, and print services. Specifically, OfficeMax offers paper, writing instruments, printers, computers, desks, chairs, copy, and print services. OfficeMax vision focuses on supplies companies need to manage workloads so they can be at the frontline of business. They are also there to help organizations succeed with top, trusted brands of office products; technology and office furniture that delivers the performance and quality that is deserved† (OfficeMax, 2012). OfficeMax internal environment consist of the ideas and beliefs of the employees working toward the strategy of serving over 800 stores through direct sales, catalogs, and e-commerce. â€Å"With 40 years experience, innovative technology, convenient retail presence and most knowledgeable and friendly associates to back it up, we’re confident our customers won’t find another company who can deliver at every level†( OfficeMax- Who Are We, 2012). In order to determine competitive advantages, A SWOT analysis is completed. OfficeMax strengths surrounds what the company does well and resources that it can draw on, such as being a leader in both office and retail office supplies and the ability to provide document services and furniture to small, medium, and large businesses. The weaknesses of what OfficeMax could improve on or where it does not have as much resources as others could stem from additional marketing capabilities and being able to stand up to the competitor Staples, who is well known in the industry. OfficeMax should consider more advertising and marketing in order to get its name out there more in order to be sustainable. Opportunities that are open to OfficeMax and things that the company can take advantage of are: new technology and ways to attract more customers. A threat that could possibly cause issues would be their competitor, Staples, who seems well known in this industry. In the scanning process, OfficeMax has identified itself with innovative technology, but could look into new ways to provide newly developed software annually and move into areas that have not been targeted. OfficeMax has achieved the following environmental milestones: The first nationally distributed 100% post-consumer copier paper developed by their company and the first nationally distributed 100% post-consumer color copier paper manufactured by wind power (OfficeMax, 2012). Sprint Sprint is one of the leading providers of wireless communication. Innovation of implementing creative ideas is a corne rstone to the company’s success. Sprint focuses on services by looking at ways to bring the customers in and retaining them. The biggest seller for Sprint currently is the unlimited data plan. Sprint is the only network that has this program. With their competitor, ATT, customers tend to go over their plan usage, which causes more fees and the uncertainty of interrupted services. Sprint had to research and become creative in order to stay a step ahead of its competitors and provide innovative ideas. â€Å"Sprint Nextel served more than 55 million customers at the end of 2011 and is widely recognized for developing, engineering, and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States† (Sprint, 2012). In order to continue being one of the leading providers in wireless communication, Sprint will have to continue looking at innovative ways to stay ahead of its competitors and providing customers with excellent services. In taking a look at the environmental scanning process for Sprint, it must be noted that external information must be gathered from all levels need to be evaluated to see what kind of information is being distributed inside the company that could possibly cause concerns for management as it relates to any changes. With the market changing, Sprint has to scan the market environment by looking at technology and the competition. Sprint tracks trends that alert them what age groups, nationalities, and genders are purchasing certain phones and phone plans. Some external environmental forces that affect Sprint are shifts in demographics, amount of money consumers make, technology changes, and its competitor. In looking at a SWOT analysis, Sprint strengths focuses on providing a Sprint Nextel phone that has â€Å"served more than 56 million customers at the end of the second quarter of 2012 and is widely recognized for developing, engineering and deploying innovative technologies† (Sprint, 2012). Some weaknesses are the need to continue to look at more innovative ways to stay ahead of its competitors and providing customers with excellent services, a better supply chain, and bad signal communication. An Opportunity for Sprint could be the idea of acquiring another company to merge with. A possible threat could be that one of its top selling phones would be sold by one of its competitors such as ATT. In conclusion, an environmental scan is very important to any organization interested in being competitive and knowing the advantages and disadvantages that face the company. In this paper, the author discussed a SWOT analysis as a way to determine a company’s strengths, weaknesses, opportunities, and threats as it relates to factors that play a part in environmental scanning. In the corporate business strategy, information is needed to determine the future and ways to remain sustainable. Sprint and OfficeMax are two companies that the author’s organization uses and supports. They are both reputable companies, but should always continue to look at way to be more resilient and continue to focus on marketing because it produces longevity.

Tourism and Hospitality Sydney Habour Bridge

Question: Discuss about theTourism and Hospitalityfor Sydney Habour Bridge. Answer: Determinants of Tourist Demand The local tourist attraction that we are going to focus on is the Sydney Habour Bridge, which is one of the most famous icons in Australia. It is also called coathanger and is the largest steel arch bridge in the world. from the bridge there is a spectacular view of the city as well as the habour.Lets look at the factors that affect tourist numbers to this famous icon.. These factors can be grouped into five major groups: Income level available. This refers to the amount of money available to consumers to spend on leisure goods, such as tourism, after having paid for their basic needs. That is, it refers to the budget constraint to which the demand for any good is subjected (Coccossis, Mexa, 2004). If income levels is high many people will visist the bridge. Price level. With regard to this variable, it must be considered that it does not affect markets of origin in the same way as tourist destinations. In the home market, high prices or strong growth in domestic prices in Australia the numbers of tourists visiting the coat hanger is affected by domestic price level. The higher the price levels the less the tourist numbers. leads to an increase in spending on basic necessities, which means that a larger part of the rent is spent for these purposes, thereby depleting Amount spent on tourism (to maintain the budget constraint).. The relationship between demand, income, and price is expressed by economists in terms of demand elasticity, i.e. The degree of change that can be expected in demand against variations, either in the price of consumer goods, or in the level of disposable income.. When the elasticity is less than 1 the demand is little sensitive to increases in income, i.e. The increase in consumption is made in a smaller proportion (Holloway, Humphreys, 2016). When the elasticity is greater than 1 means that before changes in income, the quantity demanded of tourism increases more than proportionally. Fiscal policy and expenditure controls in tourism. This variable indirectly related to the disposable income of individuals is an important economic component. Faced with an increase in the fiscal pressure, the disposable income of individuals is relatively lower and, therefore, there will be a decrease in demand. Thus , less number of tourists to the tourist attraction. Exchange rates. The explicit relationship between the currencies of the countries that emit and receive tourism is an important factor in the tourist demand. A strong relationship of the currency of the issuing country with the dollar favors the tourist demand towards the destination countries with less strong currencies against the dollar. There is also another factor of political stability, which leads to increased tourism numbers (Peters, Pi kkemaat, 2012). Australia has been having a stable political environment , hence tourists are able to visist the site. Tourism Attraction Attributes the bridge has the following attributes the habour bridge is 134m high and 1.12 kilo metres long. .it used an approximate of six million rivets before completion.during hot temperatures, the height of the arch increases by as much as 17 cm, however, this change does not compromise the bridge. the bridge weighs approximately 52800 tonnes, with the arch weighing 40000 tonnes. 80% of the steel was imported from England. it took 9 years to complete the bridge in which 16 men died from the bridge related work. Throughout history the practice of tourism has been evolving, modifying travel patterns that have allowed the emergence of new destinations around the world. Even to the interior of the nations, the forms of travel and destinations visited have been modified, increasing the type and number of tourist products (Page, Connell, 2010). This diversification of tourism products is based on the new market segments that arise with the change in social patterns such as the emergence of single-parent trips or the increase of leisure time throughout the year, so it is necessary to identify which segment of Market can have access to the destination, how often, what is your average spending, etc. Tourist Products Among them in Australia are natural resources: beaches, mangroves, jungles, rivers, caves, flora, fauna, etc., which can form a tourist attraction; Services such as accommodation, food establishments, travel agencies, lessors and tourist guides; Accessibility: roads, and different types of transportation. Tourist destinations for optimum development and promotion of tourism must consider not only the natural resource they have, but also take into account aspects such as infrastructure, services and public planning in the city, Ease of access to the place. The attractions for visitors are the main symbols and images of tourist destinations in Australia, and as such, they reflect the differentiated valuation of certain resources and places, both by actors belonging to the community and by other agents related to the local productive system. Most of the heritage attractions have some kind of nucleus that promises a tourist experience. References Coccossis, H., Mexa, A. (2004).The challenge of tourism carrying capacity assessment.Aldershot, England: Ashgate. Holloway, J., Humphreys, C. (2016).The Business of Tourism. Harlow, UK: Pearson Education Limited. Moutinho, L. (2011). Strategic management in tourism. Wallingford: CABI. Page, S., Connell, J. (2010). Tourism. Los Angeles: SAGE. Peters, M., Pikkemaat, B. (2012).Innovation in hospitality and tourism. Hoboken: Taylor and Francis. Robinson, P., Luck, M., Smith, S. (2013). Tourism.CABI.