Q1

There are several techniques of managing risk. For each of the following scenarios, explain of how the suggested risk management technique can be applied in this case. [Treat each one separately]

A] Avoidance: the risk of a person sinking in the sea.

B] Loss prevention: the risk of family heads premature death because of a heart attack.

C] Loss reduction: the risk of losing all money by pickpockets during a vacation.

D] Non-insurance risk transfer: the risk of fluctuation in currency prices.

Q2

A restaurant is concerned with the COVID19 liability risk towards its customers and employees.

A] Explain the meaning of liability risk in this case.

B] Suggest two different risk management techniques that can be used to manage that risk. [note for each suggested risk management techniques, you need to mention the name of the selected risk management technique clearly and explain how it can be implemented in this case.]

Q3

A restaurant is concerned with the risk of fire. An insurance expert estimated the average loss in this case based on similar restaurant to be around Dollars 500,000. Whereas the total value of the restaurant is estimated at 2 million Dollars.

What will be the value of the maximum possible loss, and probable maximum loss in this case? Justify clearly your answer including an explanation of the difference between these two concepts.