The Lusaka Group of Companies comprises three companies that provide insurance and financial services within the country, Lusaka General Insurance, Lusaka Life, and Lusaka Pension Trust fund. The annual budget has just been approved by the Group Board of Directors. The Board chairman is concerned that the Budget may be misleading and could cost Shareholders loss of investment.

The Group of companies has a holding company that holds shares in the General Insurance and Life Companies while the Life company has acquired management rights to the Pension Trust Fund.

You are required

1. Identify and describe one insurable loss exposure faced by the Board of Directors individually and severally and suggest how it will be mitigated using Insurance.

2. Define the term risk based capital (RBC)

3. Describe 6 (SIX) loss exposures that are mitigated by effective RBC.