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Risk Management Final Assignment

Please answer the following questions in a separate word document while following any instructions given for each question

Question #1 Choose the correct answer

1) Pure Risk is defined as:

• An event that offers no opportunity for financial gain
• The chance a loss will occur
• A diversifiable risk
• A contingency that increases the chance of a loss

2) All the following are direct losses except:

• A car is stolen
• A house suffers flood damage
• An apartment must be rented after a house is destroyed by fire
• A business loses $100,000 in a law suit

3) All the following are direct losses except:

• A house is burglarized
• A store loses $200,000 in sales because a fire closes it down for two weeks
• A corporation must pay $1 million in ransom when its CEO is kidnapped
• A delivery truck needs $15,000 in repairs after a collision

4) Which of the following is not an example of a Catastrophic Loss Event?

• Hurricane Katrina
• Donald Trump assigned president of the united states
• September 11, 2001 terror attacks
• 2004 Tsunami in the Indian Ocean

5) Which of the following is not a method of protection of risk?

• Group insurance plans
• Employee benefits
• Social insurance
• Humanitarian aid

6) Which of the following is not a hazard?

• Storing one ton of dynamite in a garage
• Unhealthy habits (eating lots of junk food and smoking)
• Skating on thin ice
• Getting shot accidentally while deer hunting

Question #2

Show Image

The above figure represents a simple supply chain for a restaurant; you are required to name 2 risks that may occur at every stage of this supply chain and how you would manage or avoid this risk. (Only two risks per stage is required). Risk Management Final Assignment

Question #3 

As a financial risk consultant your client comes to you with two projects, he intends to choose only one to invest in

Project X                                                                             Project Y

Initial investment = $10,000                                    Initial Investment = $15,000

Annual ROI = 10%                                                         Annual ROI = 12%

Returns: Year 1 = $5,000                                           Returns: Year 1 = $4000

Year 2 = $6,000                                                             Year 2 = $6000

Year 3 = $7,000                                                              Year 3 = $8,000

Question #4

Briefly answer the following questions according to your understanding of the course:

• Which offers a better investment plan, Simple or compound interests? Explain why!
• What are the main steps of managing risk? List and explain each step!
• Explain both Market and liquidity risks, give one example for each.

Question #5

• Elizabeth Taylor’s wedding “case study”

Ground Rules

There are not many ground rules for the exercise.

1. The facilitator must try to convince everyone to participate and try not to let one person dominate the discussion.
2. No risks should be rejected. Part of the fun is to have the participants think up things that could happen at the wedding that are a bit on the absurd side.
3. To limit the number of risks the participants must limit the risks to those that can occur on the day of the wedding.
4. The participants must be reminded that when they identify a risk it should be stated in a way that it can be quantified.

Project Description

It is spring and Elizabeth Taylor has decided to tie the knot and get married once again. This will be Liz Taylor’s 9th marriage. That is if you count her marriage and remarriage to the same person as separate marriages. She married Richard Burton two times, in 1964 and again in 1975. They were of course separate weddings. Liz wants the wedding to be a great success because it may be her last shot at happiness and it may be her last chance to have a really big wedding.

As the project manager you are responsible for the events that take place on the day of the wedding. You are not responsible for the events that take place prior to and after the wedding. You are not responsible for the prenuptial agreement, purchasing the wedding rings, inviting the guests or arranging for the honeymoon. You are responsible for arranging all of the events that take place on the day of the wedding. These include, but are not limited to, making arrangements for the following:

CHOOSE 1 CATEGORY

Food

• Catering food in the welcoming area, the wedding area, the entertainment area
• Catering a sit down dinner after the wedding
• Main wedding cake and mini wedding cakes for each table

Beverages

• Providing alcoholic and non-alcoholic drinks in all areas

Entertainment

• Small band music prior to the wedding
• Dance music after the wedding
• Michael Jackson and his backup band
• The New York Philharmonic Orchestra
• The Blue Angels

Party Favors

• Small gift for each of the guests
• Larger gift for each of the members of the wedding party
• Small gifts for staff
• Large gifts for local police

VIP Transportation

Special transportation for distinguished guests:

• President of the United States
• Yasser Arafat of the Palestinian government
• Queen Elizabeth II of Great Britan
• President Putin of Russia
• Former President Jimmy Carter
• Former President Gerald Ford
• Donald Trump
• 14 United States Senators
• 114 United States Congressmen
• The Gotti Family
• Debbie and Kelly O’Bray
• Cathy Tonne

Security

• Perimeter security from paparazzi
• Internal security for unruly guests
• Terrorist attacks
• Contamination of food and drink
• Air security
• Parking lots

Medical Care

• Emergency medical staff
• Emergency infirmary
• Private Doctor for bride and groom

Clothing

• Liz Taylor’s dress
• Groom’s clothing
• The wedding party
• Dressers for hair, make up and clothing

Location

• The wedding is to take place outdoors at Liz Taylor’s mansion which is on 10 acres of landscaped lawns and gardens in Beverly Hills, California.

Decorations

• Flowers and decorations inside house
• Flowers and decorations outside house
• Wedding flowers for Bride
• Flowers for wedding party
• Risk Management Exercise

With the help of the presenter/facilitator, the attendees will use the brain storming technique to list the risks that they think are associated with the project. The facilitator will list the risks on a flip chart or suitable display device. Risk Management Final Assignment

After going through the case, you are required to select one of the above categories and use your risk management knowledge to fill the bellow table which explaining your role in both introduction and conclusion passages as explained in class.