Personal Risk Management Process

Personal Risk Management Process – AGENDA Meaning of Risk Management Objectives of Risk Management Risk Management Steps in the Risk Management Process Benefits of Risk Management Personal Risk Management.

Presentation on theme: “Agenda Meaning of Risk Management Objectives of Risk Management Risk Management Steps in the Risk Management Process Benefits of Risk Management Personal Risk Management.” – Proposal text:

Personal Risk Management Process

2 AGENDA Meaning of risk management Objectives of risk management Steps of a risk management system Benefits of risk management Personal risk management

Hr Risk Management: A Practitioner’s Guide

3 IMPORTANCE OF RISK MANAGEMENT Risk management is a method of identifying an organization’s exposure to loss and choosing the most appropriate techniques to handle such exposure. , a ship that can be damaged by accident, overheating in the boiler room, hijacking by pirates etc.

5 OBJECTIVES OF RISK MANAGEMENT Risk management has objectives before and after loss. Loss Objectives: Prepare for potential losses in the most economical way Minimize stress Fulfill all legal obligations (both corporate/company and international)

6 OBJECTIVES OF RISK MANAGEMENT Post-loss objectives: Ensure the safety of the business Continue operations Stabilize revenues Maintain growth Minimize the impact of a loss on others and society

8 IDENTIFICATION OF LOSS SPECTRUM Exposure to property loss (cargo and ship damage) Exposure to liability loss (pollution and abuse of power) Exposure to business life (after loss of cover) Exposure to loss of personnel (death of employee) Exposure to crime loss (terrorism and piracy) Employee exposure to loss of profits (non-compliance) Exposure to foreign loss (currency fluctuations) Exposure to loss of intangible assets

Risk Management Challenges

10 HAZARD IDENTIFICATION METHODS COMMON QUESTIONNAIRE SETS QUESTIONNAIRES QUESTIONNAIRES AND CHECKLISTS require respondents to answer a series of questions indicating exposure to minor or major hazards.

11 RISK IDENTIFICATION METHODS OPERATING RULES A flowchart that shows the flow of activities and operations can show operational challenges where losses can have serious financial and financial consequences for the company Financial statement Analysis of financial statements indicates that large assets indicate that large assets indicates Assets to be protected, loss of income exposure and etc. Industry trends and market changes can create new risk exposures. for example, exposing acts of terrorism

12 MEASUREMENT AND ANALYSIS OF LOSSES Estimate the frequency and severity of losses for each type of loss. Loss exposures are analyzed and can be classified according to their relative importance. shit happens

13 CHOOSING THE RIGHT COMBINATION OF INSTRUCTIONS FOR LOSS MITIGATION Risk control refers to techniques that reduce the frequency and severity of losses Risk control methods include: Loss prevention Loss prevention Prevention means exposure to loss that is never found, or there is a loss. presentation is omitted. The main advantage of avoidance is that the probability of loss is zero if exposure to loss is never found. However, the abandonment may still make the company liable for the remaining sale of the old goods.

Chapter 3 Introduction To Risk Management

14 Loss prevention refers to measures that reduce the frequency of certain losses, for example installing safety features on dangerous goods in accordance with the IMDG Code Reduction refers to measures that reduce the severity of losses after they occur. , For example, installation of automatic sprinkler system, provision of PPE (personal protective equipment) on the ship in sufficient amount or more than the number of crew / & passengers in accordance with SOLAS agreement.

15 Risk financing refers to techniques that provide financing for losses after they occur. Specific risk financing techniques include retention, uninsured transfers and insurance. Risk financing methods include: Retention means that the company retains some or all of the losses resulting from a given loss exposure. The hold can be active or passive. Active risk retention means that the company is aware of its exposure to loss and has plans to retain some or all of it. However, passive risk retention is not recognizing exposure to loss, failing to act, or forgetting to act. Non-insurance transfers are methods other than insurance whereby a net risk and its possible financial consequences are transferred to another party. Examples include contracts, agreements and hold harmless agreements. Business insurance can also be used to finance losses. Insurance is suitable for loss exposures with low probability of loss, but high loss severity.

16 RISK MANAGEMENT METHODS: Retention Retention means that the company retains some or all of the loss that may result from a given loss Retention is effectively used when: No other remedy is available Worst possible loss is not a risk loss is more predictable Retention rate is the dollar amount of losses that a company will retain A financially strong company can have a higher retention rate than a financially weak one Maximum retention can be calculated as a percentage of the company’s working capital

17 RISK FINANCE METHODS: Keep a risk manager has several methods to pay for remaining losses: Net current income: losses are treated as current costs of unfunded reserves: losses are deducted from the reserve balance. and money is borrowed to pay losses when they occur

Insu 2500 Chapter 3 Topic Objectives Risk Management Defined

18 RISK FINANCE METHODS: RETENTION Life insurance is a special form of planned retention Some or all of the exposure to a particular loss is retained by the company Another name for insurance is self-funding Widely used for workers’ compensation and group health benefits Risk A captive group is a captive group that can write any type of insurance except employer’s liability, workers’ compensation, and personal lines Federal law allows employers, business groups, government entities, and other entities to form risk retention groups. the laws

19 RISK ECONOMICS METHODS: Cost Containment Benefits Save Costs Loss Prevention Incentives Increase Cash Flow Potential Losses High Potential Losses High Potential Costs High Taxes

20 RISK FINANCE METHODS: NON-INSURANCE TRANSFER Non-insurance transfer is a method other than insurance where pure risk and its possible financial consequences are transferred to another party.

21 RISK FINANCIAL APPROACH: FREE TRANSFER TO UNINSURANCE Advantages Can transfer some uninsured losses Saves money Can shift losses to someone better positioned to control losses. To pay, the company is still responsible for the loss and the insurers cannot give a transfer credit

The Risk Management Process: 4 Essential Steps

22 RISK FINANCE METHODOLOGY: Insurance is suitable for loss exposures with low probability of loss, but high loss severity. the insurer does not contribute to the loss until the actual loss is greater than the company decides to retain.

23 RISK FINANCE PROCESS: INSURANCE The risk manager negotiates the terms of the insurance contract The risk manager must review the insurance program.

24 RISK ECONOMY METHODS: Advantages of insurance companies are compensated for losses Uncertainty is reduced Insurers can provide other services for risk management Insurance costs are tax deductible Disadvantages Opportunity costs are expensive Opportunity costs must be considered to negotiate contracts takes time and effort The risk manager can get bored. to control losses

26 MARKET CONDITIONS AND SELECTION OF RISK MANAGEMENT TECHNIQUES Risk managers can change the technique they choose depending on the market conditions in the insurance markets. and insurance is getting harder to come by.

Personal Risk Management Questionnaire

27 IMPLEMENTING AND MAINTAINING A RISK MANAGEMENT PROGRAM Implementing a risk management program begins with a risk management policy statement that: Describes the company’s risk management objectives A risk to large enterprises A risk management handbook can be used to: describe a risk management program