RISK MANAGEMENT THEORY QUESTIONS Module 1 3 Marks. 1. 2. 3. 4. 5. 6. 7. 8. 9. Differentiate between risk & uncertainty? What is risk control?

Briefly explain the principle of insurable interest. What is risk management ? What is principle of subrogation in insurance? What is reinsurance? What is the difference between pure risk & speculative risk? Give examples. Write a note on risk evaluation and risk identification. What is a warranty in an insurance contract.

7 Marks 1. 2. 3. 4. 5. 6. 7. Explain the significance of insurance & financial derivative instruments in hedging risk. Briefly explain the steps involved In the risk management process. What are the objectives of Risk Management? Differentiate between pure & speculative risk. What is insurable interest? Why is an insurable interest required in every insurance contract? Discuss in detail the sources of risk for a firm. Critically examine the risk analysis & risk control process of financial assets.

10 Marks. 1. Why is risk identification important for a firm? Briefly explain the steps in the risk management process. 2. What is the importance of risk management in an organization? Explain in detail the Various steps involved in organisation risk management. 3. Briefly mention the various principles (elements) of an Insurance contract. 4. Bring out the role of IRDA in regulating the insurance in India. 5. What are the requirements of an insurance contract? Explain its distinguishing characteristics. 6. Discuss the recent developments in the Indian insurance sector. 7. What is life insurance? How is it different from non-life insurance? Also explain different life insurance products. 8. Classify and explain the various types of risk. Module 2 3 Marks. 1. What is the difference between long forward position & short forward position? 2. What are limits on futures? When will the trading on futures stop? 3. What is an Derivative instrument? 4. Under what circumstance are i) a short hedge ii) long hedge appropriate? 5. What are interest rate futures contracts? 6. Explain types of margins in futures contract? 7. What is Convenience Yield? 8. What is a hedge ratio? How is it determined?

7 Marks 1. Differentiate between forward & future contract. 2. Briefly explain the various functions performed by derivatives markets. 3. What are OTC derivatives and how are they different from exchange traded derivatives? 4. Briefly explain the concept of marking to market in relation to futures trading. Also explain different types of margins required to be maintained by investors. 5. Who are the different types of players in the derivative market? Explain their role. 10 Marks. 1. Futures contracts are standardized form of forward contracts. Comment by highlighting the similarities and differences between the two. 2. What is a future contract? What are its characteristics? How are the financial futures different from commodity futures?