1.     Explain the steps in the risk management process. Which step is the most important?

2.     Assuming you own a small restaurant, describe and provide an example of the following risk control techniques you would use.

a.      Avoidance:

b.     Loss prevention:

c.      Loss reduction:

d.     Duplication:

e.      Separation:

f.      Diversification:            

3.     Answer the following:

a.      What is a captive insurer?

b.     Explain the advantages of using a captive insurer in a risk management program.

c.      Provide a real-life example of a large captive (include citation).

4.     You have just opened a dance school that can teach up to 100 students various forms of dance. You are concerned about liability exposures as well as earning enough revenue to be profitable. For each of the following risk management techniques, describe a specific action using that technique that may be helpful in dealing with the school’s liability exposure.

a.      Avoidance:

b.     Loss prevention:

c.      Loss reduction:

d.     Noninsurance transfers:

e.      Transfer:

5.     Avoidance is a risk-control technique that can be used effectively in a risk management program.

a.      What is the major advantage of using the technique of avoidance in a risk management program?

b.     Is it possible or practical for a firm to avoid all potential losses? Explain your answer.