Risk Management Report
Summary
of the project
The
purpose of this project is to help you apply what you have learned in risk
management to a real business. You have done three projects associated with a
‘fictional’ type of business. First you identified risk. Then you assessed and
treated risk and finally you considered the business from an ERM framework.
What you will be doing in this Risk Management Report project will be very
similar but you will do this with a real business, organization, or enterprise.
I have included a checklist at the end of this document of the information you
should include in your report. I am looking to see that 1) you understand the
business, 2) have done a good job of identify, analyzing and treating risks, 3)
you have explained this in a way that the business you are analyzing will
understand—all of this in relationship to what we have covered in the Foundations
of Risk Management and Insurancetext and principally chapters 1-5. This
report is worth up to 100 points.
The
Business
The
business needs to be a small business. Don’t go after an Exxon or even a large
municipality. It simply will be too complex for this project and I am not
looking for you to write a book about the business. Stay to small retail,
service, manufacturing, or distributing or an association or a utility or a
small municipality or division of a midsize municipality. If you are looking at
schools, pick one school not the whole ISD. Good places to look for business
candidates are friends or relatives who own or work in small operations.
Consider also business you regularly frequent and the people know you. For
those in the insurance business already, perhaps you can get an appointment
with a customer or work with a producer at one of your agencies to help you
find a good business to work on. These colleagues can give you a lot of
information about the business, but the report must be in your own words.
Get
to Know The Business Personally
If
it is feasible (and please try to do this) you should interview someone who can
give you good information about the business. You should also to go through the
business i.e. take a tour of operations—make sure you have permission and are
with someone who has the authority to give you a tour! If you cannot get into
the business or meet with someone you will have more work to do because you
will have to do things like look up the website, perhaps get information from
the Better Business Bureau or do things like estimate revenue per employee and
number of employees through The Federal Bureau of the Census or other places.
THIS
BUSINESS CAN’T BE IN THE SAME CATEGORY AS THE BUSINESS YOU WORKED ON FOR THE
WEEKLY PROJECTS. You have done that already…
IMPORTANT:
You must disguise the business. Do not use the name of the business or anything
else that can identify the business directly in the report or otherwise. I will
not ask for pictures of the business. You need to explain to the business what
you are doing and that you will keep identifying business information
confidential.
Who are you in
this project?
You could be any one of the following: A risk management
‘consultant’, an underwriter, or a producer. This is a small business so it is
not likely that it will have a full-time risk manager. You will fill that role
from the outside. Your customer (the business, entity, or enterprise) likely
will not have sophisticated risk management skills so you need to reduce jargon
as much as possible for plain English explanations. Your report is to be
written to the senior person in the business, entity, or enterprise who is in
charge of risk management and/or insurance.
Format of the Report
You decide the format. Remember who it is for. It should be
no more than would fill three and not less than two single spaced pages with
one inch margins all around (you can double space or format any way you
want)…1000-1500 words. If you need to add additional information, it will not
be considered subject to the page requirement. Remember, no pictures or
identifying materials i.e. screen shots of the website or brochure. The report
should be all in your words.
Checklist of Information to Include in The Report
? Type of business and
SIC code (standard industrial classification—get online if you can’t get from
the business)
? For profit, not for
profit, government, partnership, sole proprietorship, corporation, etc.
? Number of employees
(approximate)
? Management
structure–brief
? Locations—e.g.
Houston, LA, Singapore
? Total sales (revenue,
rents, etc.—something to indicate about how big they are)
? Description of
operations—Summarize what they do and how they do it and who they do it for
? Nature of their
customers—don’t repeat previous (retail, wholesale, worldwide, local. Etc.)
? How are they
regulated (where applicable) – most organizations have some kind of regulation
? From ERM – what are
the internal and external contexts
? SWOT analysis of the
business (plenty of information about SWOT online) (Strengths, Weaknesses,
Opportunities, Threats)
? What is their risk
appetite and tolerance—explain briefly what you mean
? Identify any foreign
exposures including import, export, or locations, etc.
? COPE of any property
and identify the critical 1-2 property exposures (Construction, Occupancy,
Protection, External)
? Identify the critical
1-2 liability risks
? Identify the critical
1-2 employee risks
? Identify the critical
1-2 net income risks
? Identify the critical
1-2 strategic risks (consider from SWOT)
? Identify the critical
1-2 financial risks
? Identify the critical
1-2 regulatory risks (where applicable)
? Analyze and evaluate
each of the critical risks
? Develop the optimal
risk treatment for each of the critical risks
? Evaluate for each of
the critical risk treatments whether the residual impact is within the
organization’s risk tolerance and appetite.
? Summarize the
challenges you see in risk management for this business
? Add any other information you believe is relevant to
understanding this business.
