Question
Man.Project 2
assignment #1
LTD Acceptance is a private property and auto insurance
carrier that specializes in sports cars and motorcycles. This
organization is owned by LTD Capital, a large equity group with
over 15 holdings. LTD Acceptance is the parent company’s single
largest holding as it drives 70% of total revenue. Due to the
inherent risk involved in that segment of the market, many of LTD
Acceptance’s competitors do not offer policies for sports cars or
motorcycles. This market segment is underserved which is why the
organization has 20,000 active policies for a sports car or a
motorcycle.
LTD is headquartered in Houston, TX. LTD does not sell
insurance directly to the public. Instead, it uses third-party
agents to sell its policies. LTD handles all customer service needs
including claims intake, policy services, and general questions.
The company operates in four states: California, Texas, Louisiana,
and Florida. Currently, LTD does not have an active system in place
to ensure that its agents are in fact using LTD guidelines to
screen potential policyholders. However, no evidence of negligence
has emerged so far as the organization has yet to have a year in
which it was not profitable. LTD has also had the good fortune of
not suffering losses because of natural disasters or catastrophic
events.
Organizations in every sector experience breakdowns or
failures that compromise the efficiency and efficacy of their
operations. This concept is defined as an operational failure.
Operational failures have a direct and adverse impact on
profitability. As such, the shareholders want assurance that the
risk management team is actively working on mitigating the
occurrence of these failures. As the newly hired senior risk
analyst, you are responsible for outlining a plan to do just that.
For this deliverable, provide a report to your supervisor
which provides a framework for managing operational risk exposures.
Your report should include the following:
Explain why the operational losses cannot be broadly managed.
Why do they have to be categorized?
For each operational risk exposure listed below, provide at
least two examples of potential losses from the exposure and
reasons why you need to manage it.
Internal fraud
External fraud
Employment practices and workplace safety
Clients, products, and business practices
Damage to physical assets
Business disruption and system failures
Assignment #2
LTD Acceptance is a private property and auto insurance
carrier that specializes in sports cars and motorcycles. This
organization is owned by LTD Capital, a large equity group with
over 15 holdings. LTD Acceptance is the parent company’s single
largest holding as it drives 70% of total revenue. Due to the
inherent risk involved in that segment of the market, many of LTD
Acceptance’s competitors do not offer policies for sports cars or
motorcycles. This market segment is underserved which is why the
organization has 20,000 active policies for a sports car or a
motorcycle.
LTD is headquartered in Houston, TX. LTD does not sell
insurance directly to the public. Instead, it uses third-party
agents to sell its policies. LTD handles all customer service needs
including claims intake, policy services, and general questions.
The company operates in four states: California, Texas, Louisiana,
and Florida. Currently, LTD does not have an active system in place
to ensure that its agents are in fact using LTD guidelines to
screen potential policyholders. However, no evidence of negligence
has emerged so far as the organization has yet to have a year in
which it was not profitable. LTD has also had the good fortune of
not suffering losses because of natural disasters or catastrophic
events.
LTD Acceptance has 18,000 active policies in its book of
business, and the firm is yet to experience a year period with high
loss ratios. To increase its profitability ratios, LTD has invested
the premium dollars across various asset classes. LTD’s Chief
Financial Officer (CFO) believes the organization should take a
calculated risk and allocate the assets more aggressively. As the
senior risk analyst, you have carefully analyzed the organization’s
numbers and strongly believe that LTD’s favorable loss ratios are a
result of chance and not through the sensible use of the firm’s
systematic framework for managing risk. You also believe the CFO is
purely looking at the rewards and not the risks. Therefore, you do
not believe the firm should increase risk exposures at this time.
To convey your point of view, you have decided to conduct a
cost-benefit analysis report which should include the
following:
For this report, provide an introduction which discusses the
relationship between risk and reward. Using the information
provided in the background of this case, explain why the
organization may appear to be in a better position on paper than it
really is.
Include at least two ways how each party listed below can be
adversely impacted if the organization suffers losses as a result
of a more aggressive approach.
Policyholders
Shareholders
Vendors
Creditors
Employees
Also include a discussion on how effective financial management
aligns with overall risk management.
Your conclusion should highlight how the risk assumed in an
organization’s activities should be consistent with its long term
goals. All business activities include inherent risks. Thus, all
the activities and risks the firm takes should help them reach
their long-term goals. If the managers engage in activities that
create risks outside of this scope, it can create problems. For
instance, most firms have the goal of driving sustainability.
However, if they are highly leveraged, then seeking additional
credit for a project can derail the long term goal of
sustainability.
Other samples, services and questions:
When you use PaperHelp, you save one valuable — TIME
You can spend it for more important things than paper writing.
