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MGMT 3043 RISK MANAGEMENT AND INSURANCE

This document provides instructions for an assignment on risk management and insurance. It includes 8 questions assessing various concepts: 1) The difference between risk/uncertainty, hazard/probability, and pure/speculative risk. 2) What liability risk is and examples of sources of liability risk. 3) Calculations to determine expected industrial accidents, monetary losses, and objective risk given changes in the insured workforce. 4) The difference and similarities between insurance and gambling.

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Hailemariam Weldegebral
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72 views2 pages

MGMT 3043 RISK MANAGEMENT AND INSURANCE

This document provides instructions for an assignment on risk management and insurance. It includes 8 questions assessing various concepts: 1) The difference between risk/uncertainty, hazard/probability, and pure/speculative risk. 2) What liability risk is and examples of sources of liability risk. 3) Calculations to determine expected industrial accidents, monetary losses, and objective risk given changes in the insured workforce. 4) The difference and similarities between insurance and gambling.

Uploaded by

Hailemariam Weldegebral
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS


MANAGEMENT PROGRAM

Assignment (40%)
COURSE CODE: COURSE RISK MANAGEMENT AND INSURANCE CODE: MGMT 3043

Instruction
 Your answers should be submitted hand written. Computer written answer will not be marked
 Only readable and neat handwritings are marked
 You are expected to show all the necessary details & steps

1. Explain the difference between the following concepts: ( 6 points)


A. Risk and uncertainty?
B. Hazard and probability?
C. Pure risk and speculative risk?
2. What is liability risk? Explain the sources of liability risk using example? ( 4 points)
3. Over the past five years the annual industrial work force insured in “AFRIKA” insurance Company was 800
workers and the annual number of industrial accident was 40. Average monetary loss per industrial accident
was birr 12,000. Assuming a worker can suffer more than one accident during a year and if in the next year
the total number of insured industrial workers will increase by 20%, answer the following questions: (8
points?
A. What is the expected number of industrial accident in the next year?
B. What is the expected monetary loss in the next year?
C. What is the next year objective risk?
D. What should be the size of the work force insured (n) if the insurer has a desire to reduce
the objective risk by half?
4. Explain the difference and similarity between insurance and gambling? ( 2 points)
5. Mention at least four risk control tools and discuss about them using practical examples? ( 4 points)
6. Explain the Non-forfeiture options in life insurance provisions? (4 points)
7. Explain the legal principles of insurance? ( 4 points)
8. XYZ insurance Company issued a four years term life insurance to 2000 male insured at age of 25 for a death benefit
of birr 50,000 per each death claim. Assume a 5% interest rate (discount rate) and 35% loading expense & the
mortality rate given in the table below, answer the following questions: ( 8 points)

AGE 23 24 25 26 27 28
Death rate per 1000 male population 2 2.4 2 3 4 4.5

Based on the information provided determine:


A. The net single premium? ( 3 points)
B. The net annual premium? ( 3 points)
C. The gross single premium? ( 1 points)
D. The gross annual premium? ( 1 points)

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