To prepare a risk management plan for the following. Family : Mother age 37, Fat

Question

To prepare a risk management plan for the following.

Family : Mother age 37, Father age 39, 3 children ages 14,11 8 and dog age 3.

Income: Mother $35,000, Father $115,000 ( both employed outside of home)

Assets: Home 350,000, in ground pool, perimeter trees and shrubs, storage shed, 2 Autos ( 2014 SUV,2011 sedan) $22,000 savings, $4,500 in antiques,

Both have IRA’s current total = 25,000.

Other data: living in Allentown, PA, Father commutes 37 miles round trip 5 days a week, Mother commutes 5 mile a day round trip. Mothers parents both living (61 and 59).

1. What are the Techniques to treat loss Exposure that is suitable for this family?

Explanation / Answer

The risk management techniques are provided below.

1. Risk control: The term “Risk control” refers to the procedures adopted to reduce the loss, by reducing frequency and severity of losses. The risk can be controlled by avoidance, loss prevention, and loss reduction.

2. Risk financing: The term “Risk financing” refers to the methods used to finance the loss occurred. If a loss occurred then an attempt would be made be made to indemnify those losses. The method can be used for risk financing are commercial and self-insurance.

Thus, the family mentioned in the given problem can use commercial insurance, avoidance, loss prevention, and loss reduction for their risk management plan.

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