THE TOOLS & TECHNIQUES OF RISK MANAGEMENT & INSURANCE
1st Edition
Educational Objectives
CHAPTER 1 INTRODUCTION TO TRADITIONAL RISK MANAGEMENT
Upon completion of this chapter, the student should be able to:
1. outline the steps in the risk management project
2. discuss the types of risk-financing options that are available
CHAPTER 2 ENTERPRISE RISK MANAGEMENT
Upon completion of this chapter, the student should be able to:
1. list the primary objectives of enterprise risk management
2. differentiate between traditional and enterprise risk management
3. explain the quadrants of risk in an organization
4. discuss the meaning and use of integrated risk structures
CHAPTER 2 RISK ASSESSMENT: IDENTIFICATION
Upon completion of this chapter, the student should be able to:
1. outline the main activities that are associated with risk assessment
2. categorize owned and nonowned assets
3. categorize third-party liability exposures
4. explain the optional resources available to identify risks
CHAPTER 4 RISK ASSESSMENT: QUANTIFICATION
Upon completion of this chapter, the student should be able to:
1. define exposure quantification
2. discuss the difference between loss frequency and severity
3. differentiate among the main types of techniques used to quantify risk
4. discuss the importance of loss simulations in quantifying risk
CHAPTER 5 OVERVIEW OF RISK TREATMENT ALTERNATIVES
Upon completion of this chapter, the student should be able to:
1. outline the four fundamental loss exposure treatment options
2. discuss the difference between noninsurance and insurance transfer of risk
3. discuss the importance of loss prevention and reduction
CHAPTER 6 NONINSURANCE TRANSFER OF RISK
Upon completion of this chapter, the student should be able to:
1. define noninsurance transfer of risk
2. differentiate between before-loss and after-loss transfers of risk
3. list and briefly explain the types of before-loss and after-loss transfers of risk
CHAPTER 7 INSURANCE AS A RISK TRANSFER MECHANISM
Upon completion of this chapter, the student should be able to:
1. define insurance
2. list the various types of insurance intermediaries
3. differentiate between nonadmitted and admitted insurance companies
4. discuss the importance of binders of insurance
5. outline the steps to implementing an insurance program
6. explain the importance of a declarations page
CHAPTER 8 OVERVIEW OF ALTERNATIVE RISK TRANSFER TECHNIQUES
Upon completion of this chapter, the student should be able to:
1. define alternative risk transfer
2. differentiate between the two basic options for managing risk
3. outline the differences among types of risk retentions
4. list the principal goals of captive insurance companies
5. outline the major attributes of the various types of captive insurance companies
6. briefly outline the taxation issues that arise from the use of captive insurance companies
CHAPTER 9 GLOBAL RISK MANAGEMENT
Upon completion of this chapter, the student should be able to:
1. outline the three common types of global exposures
2. list the steps to implementing a global risk management program
3. differentiate between nonadmitted and admitted insurers in term of foreign risks
4. discuss the differences between DIC and controlled master programs of insurance
5. outline global exposures that exist in addition to property and liability risks
CHAPTER 10 LOSS CONTROL TECHNIQUES
Upon completion of this chapter, the student should be able to:
1. define loss control
2. differentiate among the various loss control theories
3. outline the five-step process to developing a contemporary loss control system
4. explain various techniques to measure optional loss control solutions
5. outline the goals for implementing a loss control program
CHAPTER 11 EMERGENCY RESPONSE PLANNING
Upon completion of this chapter, the student should be able to:
1. outline the goals of emergency response planning
2. list and differentiate among the nine steps involved in developing and implementing an emergency response plan
3. recognize the most important aspects of an emergency response plan
CHAPTER 12 BUSINESS CONTINUITY PLANNING
Upon completion of this chapter, the student should be able to:
1. define business continuity plan
2. discuss the major attributes of a business continuity plan
3. list methods that may be used to assess risks in the business continuity planning process
4. outline the goal of business impact analysis
5. discuss the purpose of a crisis management team
CHAPTER 13 CLAIMS MANAGEMENT
Upon completion of this chapter, the student should be able to:
1. define claims management
2. outline the four elements of loss experience
3. discuss what happens after a claim is filed
4. outline the importance of reservation of rights letters
5. explain the term “claim tail”
CHAPTER 14 MONITORING CLAIMS FOR FINANCIAL ACCURACY
Upon completion of this chapter, the student should be able to:
1. discuss the financial elements of individual claims
2. explain how to calculate a loss ratio
3. discuss the importance of reviewing claims on a regular basis
CHAPTER 15 INSURANCE COMPANIES AND RISK MANAGEMENT
Upon completion of this chapter, the student should be able to:
1. list the types of property and casualty insurance companies
2. discuss how insurance companies are regulated
3. outline reasons why an insurance company’s financial strength is important
4. list the major reasons for using reinsurance
5. outline the major types of reinsurance
6. briefly describe the term financial services convergence
CHAPTER 16 WORKING WITH AN AGENT OR BROKER
Upon completion of this chapter, the student should be able to:
1. discuss why most businesses need to use an insurance intermediary
2. outline the primary steps in working with an agent or broker
3. list reasons for conducting periodic agent/broker reviews
CHAPTER 17 COMMERCIAL GENERAL LIABILITY INSURANCE
Upon completion of this chapter, the student should be able to:
1. list the four exposure areas for which the CGL policy provides coverage
2. outline the general duties of a CGL policy
3. outline how the limits of insurance on a CGL policy apply
4. differentiate between claims-made and occurrence-based forms
5. discuss the use of additional insured endorsements
CHAPTER 18 THE WORKERS COMPENSTION SYSTEM
Upon completion of this chapter, the student should be able to:
1. differentiate between compulsory and elective workers compensation laws
2. discuss the application of the term “out of and in the course of employment”
3. define the doctrine of exclusive remedy
4. outline how workers compensation exposures are classified and rated
5. explain experience rating
6. list the major types of workers compensation financial plans
CHAPTER 19 COMMERCIAL PROPERTY INSURANCE
Upon completion of this chapter, the student should be able to:
1. differentiate between the various loss valuation methods
2. outline the two basic methods of insuring property
3. explain the concept of coinsurance
4. list the various causes of loss provisions
5. list optional types of property insurance
CHAPTER 20 DIRECTORS AND OFFICERS LIABILITY INSURANCE
Upon completion of this chapter, the student should be able to:
1. discuss the primary purpose of directors and officers liability insurance
2. list the types of claims that directors and officers may face
3. differentiate between mandatory and permissive indemnification
4. list the common insuring agreements on directors and officers liability insurance policies
5. define allocation in terms of directors and officers liability insurance
6. state why the D&O insurance application is of critical importance
CHAPTER 21 EMPLOYMENT-RELATED PRACTICES LIABILITY INSURANCE
Upon completion of this chapter, the student should be able to:
1. list the six federally protected groups
2. discuss the jurisdiction of the Equal Employment Opportunity Commission (EEOC)
3. state why the term “wrongful act” is important in ERPL policies
CHAPTER 22 BUSINESS AUTOMOBILE INSURANCE
Upon completion of this chapter, the student should be able to:
1. list the two main types of coverage provided on a business auto policy
2. list the types of auto classifications used in rating business auto insurance
3. differentiate among the types of compulsory auto insurance laws
CHAPTER 23 CRIME INSURANCE
Upon completion of this chapter, the student should be able to:
1. state the three types of crime exposures that are excluded on commercial property policies
2. differentiate between schedule and blanket employee dishonesty coverage
CHAPTER 24 CAPITAL MARKETS RISK TRANSFER TOOLS
Upon completion of this chapter, the student should be able to:
1. list the two types of debt securities used to fund risk in the capital market
2. outline the differences between insurance derivatives and catastrophe bonds
3. state how payment by catastrophe bonds may be triggered
CHAPTER 25 LOSS CONTROL TOOLS
Upon completion of this chapter, the student should be able to:
1. list the three types of loss control approaches used to mitigate hazards
2. discuss property construction classifications
3. discuss the difference between loss prevention and loss reduction
CHAPTER 26 THE CERTIFICATE OF INSURANCE
Upon completion of this chapter, the student should be able to:
1. explain why certificates of insurance are important
2. discuss the difference between certificates of insurance and insurance policies
3. outline the steps in developing and implementing a certificate of insurance procedure
CHAPTER 27 SURETY BONDS
Upon completion of this chapter, the student should be able to:
1. name the three parties in a surety bond
2. outline the differences between insurance and surety bonding
3. discuss why the underwriting process is so critical in surety bonding
CHAPTER 28 CLAIM REVIEWS
Upon completion of this chapter, the student should be able to:
1. discuss why claim reviews are important
2. outline the steps needed to set up a process of periodic claim reviews