Answer to the question number: A

Risk management involves exposing the potential loss, or potential for gain. In addition, risk
management is designed to provide solutions for potential loss. Risk is a very subjective
term; for that reason, “loss exposure” is used by Risk managers. Implement and monitor the
risk management program: this step begins with a policy statement. This is necessary to
have an effective risk management program. This statement outlines the risk management
objectives of the firm, as well as company policy with respect to treatment of loss
exposures. First of all He/she must identify the loss exposure of the company. Then,
measure and analyse the loss exposure. After that appropriate combination of technique
for treating the loss exposure must be selected. Risk control (avoidance, loss prevention,
loss reduction). Risk financing (retention noninsurance transfer’s insurance. Last but not
least implementation and the risk management program also need to be monitored.

Answer to the question number: B

Bus4School faces property loss, human resources, and employee benefit loss exposures.
1 .Property loss: it is possible that a bus could be damaged beyond repair.
2. Liability loss: there are always a chance for a liability issue if a company vehicle is
involved.
3. Business income loss: Bus4School may loss customers to the competition resulting in a
loss of income.
4. Property loss: It is possible that a bus could be damaged beyond repair.
5. HR loss: this could happen to any company . There could be an injury to one of the drivers
from a car accident.
6. Liability loss: There is always a chance for a liability issue if a company vehicle is involved.
7. Human resource loss: This could happen to any company. There could be an injury to one
of the drivers from a car accident.
 Answer to the question number: C

This method will determine the appropriate method(s) for handling losses depending on the
variables. In order to have an efficient. Property loss the technique of loss reduction could
be used by having accurate insurance on the vehicles in the event of an accident. Loss
prevention could be used by continuing to store the buses in warehouses. Business income
loss prevention could be used by using marketing and providing superb service. Risk
management policy statement is the key to having a successful risk management program.
Human resource loss prevention could be used by having safety regulations. Loss reduction
could be used by having insurance. Liability loss prevention could be used by screening the
drivers, implementing a no drug or alcohol policy, and having strict safety regulations.

Answer to the question number: D

One source of funds could be borrowed from a bank used as a loan. Current net income is
also an option. Losses can be paid out of a firm’s net income treating losses as expenses for
that year. An unfunded reserve could be used which is a bookkeeping account that is
charged with actual or expected losses from a given exposure. Pay losses out of current cash
flow Establish a funded reserve Borrow from a bank by arranging a credit line in advance of
a loss The company may be able to join a trade association that owns a captive insurer.
Public school boards generally award contracts to the lowest bidder, but the level of service
and overall performance are also considered.

Answer to the question number: e

The maintenance department that services the buses can provide detailed information on
the mechanical condition of the 50 buses and when replacement of an older vehicle is
needed. The personnel department can provide information on employee benefit loss
exposures. Finally the department responsible for implementing safety programs is
extremely important in a loss control program. Human resource responsible for employee
benefits program Finance ; information can be provided showing the effect that losses will
have on the firm’s balance sheet and profit and loss statement Accounting provide
information on tax treatment of risk financing alternative Marketing ; safe distribution
procedures can prevent accidents.