Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Maximum probable yearly aggregate loss

08/01/2021 Client: saad24vbs Deadline: 6 Hours

1


ASSIGNMENT02: RSK4803


Question 1 [50 Marks] Question 1 consists of 5 sub-questions, with a total of 50 marks. All the questions are based on the following case study.


Big Boy Ltd is a successful transport company with a network of customers mainly based in Gauteng, but has recently started to expand its operations nationally. The board of directors of Big Boy Ltd has decided to submit a tender to provide fuel to a new power plant in the Western Cape. The new plant was developed by a large national electricity supplier for providing additional electricity during peak periods. A subsidiary of Big Boy Ltd, Enron (Pty) Ltd was established to tender for the contract and to fulfil the contract if the tender was successful. Enron (Pty) Ltd won the tender 18 months ago to transport fuel to a new Open Cycle Gas Turbine (OCGT) power plant in Rheebok in the Western Cape.


Problems experienced


Enron has experienced a number of problems since the inception of the business. The media was scathing in their reports on the negative impact on the environment that may be caused by possible oil leaks which could pollute the beaches and negatively influence the marine life. The community is demanding compensation from Enron in this regard and has also threatened to damage the pipeline. The pipeline, which is visible on the beach, is easily accessible and anyone could interfere with the effective operation of pumping oil to the tanks.


The insurance premiums on the trucks has increased with 15% due to theft of fuel after the trucks left the depot and the number of accidents caused by Enron’s drivers. Fuel consumption of the trucks are also 10% higher than budget. A preliminary investigation indicated that possible causes are the road condition and driver practices.


Enron is defending a legal claim to repair the roads between Mossel Bay and Rheebok and the quantum is estimated at R20m. A community pressure group has also commissioned an environmental impact assessment on the noise pollution caused by the trucks.


Due to a low pay increase for blue collar workers, the competition is recruiting these workers at a higher compensation rate, which is negatively influencing Enron’s staff turnover (currently 15%). An acceptable rate for staff turnover is closer to 3%. Another problem detected was the high frequency of electricity outages. As a result Enron is losing critical management information which has a negative effect on monitoring and business decisions.




©


UNISA 2017




2


ASSIGNMENT02: RSK4803


The Board of Big Boy has instructed the Chief Financial Officer (CFO) and the Chief Risk Officer (CRO) to assist Enron with projections for the next 10 years on claims of the Enron




motor fleet to determine the appropriate risk






YEAR




CPI






ZAR




















PERFORMANCE


























financing strategies for the fleet. The CFO has


















USD/ZAR






consulted with Two Hands Econometrics






2016








6.56








13.8




























2017






6.89






14.5




















Consultancy Services for estimations of the CPI




















2018








7.00








15
































and ZAR/USD for the period. Exchange rates




2019






7.32






16.5


























have a significant effect on claims inflation as






2020








7.42








16.85




























2021






6.95






15.89








40% of claims cost is in foreign currency. Refer


































2022








6.83








15.5


















































to the table for the projections provided by the




2023






6.67






14.5


























consultants.






2024








6.43








11.48




























2025






6.38






15.81










































To determine the risk financing alternatives, the CRO recommended that the maximum probable yearly aggregate loss (MPY) must be calculated for the fleet. An analysis of the fleet showed the following:






YEAR




PLANNED NUMBER OF




BUDGETED COST PER




EXPECTED NUMBER








VEHICLES




VEHICLE




OF ACCIDENTS
















2016




30




R 500 000




5






2017




30




R 500 000




6
















2018




30




R 500 000




6






2019




35




R 505 000




7
















2020




35




R 505 000




7






2021




35




R 512 000




7
















2022




35




R 512 000




7






2023




35




R 512 000




7
















2024




40




R 518 000




10






2025




40




R 518 000




10






Question 1.1








(5 Marks)


The administration cost per claim was R8 000 in 2016. Calculate the claims administration cost per claim for the projected period by incorporating the information provided by Two Hands Econometrics Consultancy Services. (Show all calculations)


Question 1.2 (15 Marks)


The average damage per accident in 2016 was R100 000 and the administration cost R8 000 per claim, which gives an average of R108 000 for 2016, and total claims cost of R540 000 for the year. Claims inflation forms a significant component of the total claims cost per accident and for that reason it is important to include claims inflation in the projections. For the purpose of this exercise, the CRO defined claims inflation as the administration cost and effect of




©


UNISA 2017






(3 Marks)






0.1




0.09




0.1




0.11




0.08




0.12




0.1




0.1




0.1




0.1






2016




2017




2018




2019




2020




2021




2022




2023




2024




2025






EXPECTED PROBABILITY




OF LOSSES






YEAR


3


ASSIGNMENT02: RSK4803


exchange rate fluctuation. Calculate the expected aggregate total claims cost per annum for the projected period by incorporating the information provided by Two Hands Econometrics Consultancy Services. (Show all calculations).


Question 1.3 (15 Marks)


Calculate the expected total claims cost for the projected period by incorporating the information of the calculations above. (Show all calculations)


To determine the probability, the Risk Management team has developed a number of scenarios by using the Delphi-technique. Although the probabilities were determined on a qualitative basis, the CRO and her team were satisfied that the values appear to be


reasonable. Factors that were considered in the scenarios were past experience, the current




situation and future trends as discussed with Two Hands Econometrics Consultancy Services. The CRO and her team determined the probability of




the expected losses for the period as indicated in the box. The CRO is of the opinion that the Chebyshev theorem is the most appropriate




method to calculate the MPY. The k-value as determined by the Risk Department is 1.25.




Question 1.4


Argue on which basis the CRO has decided that the Chebyshev theorem is the most appropriate method in this instance.


Question 1.5 (12 Marks) Calculate the MPY according to the Chebyshev method. To simplify the calculations for purposes of this examination, use for example R100 instead of R 100 000. (Show all calculations)


Question 2 [20 Marks]


Identify the forms of risk sharing in a commercial insurance contract. Argue and illustrate where appropriate with diagrams the benefits to the insurer for each method.


[TOTAL: 70 MARKS]




©


UNISA 2017

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

University Coursework Help
Top Essay Tutor
Helping Hand
Writer Writer Name Offer Chat
University Coursework Help

ONLINE

University Coursework Help

Hi dear, I am ready to do your homework in a reasonable price.

$112 Chat With Writer
Top Essay Tutor

ONLINE

Top Essay Tutor

I have more than 12 years of experience in managing online classes, exams, and quizzes on different websites like; Connect, McGraw-Hill, and Blackboard. I always provide a guarantee to my clients for their grades.

$115 Chat With Writer
Helping Hand

ONLINE

Helping Hand

I am an Academic writer with 10 years of experience. As an Academic writer, my aim is to generate unique content without Plagiarism as per the client’s requirements.

$110 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Uncle harry's go away mosquito spray - Biodegradable plastic bags business plan - King james 1 macbeth - ENG 225 Introduction to Film NO PLAGIARISM PLZ - Www2 aaahq org asclogin cfm - Paint net lesson plans - Rockingham county high school football - Cream of tartar for msg poisoning - 3 explain the biochemical reasoning behind muscle fatigue - Amherst Networking Systems adjusts and closes its books and then prepares financial statements monthly - Electric charge and force worksheet answers - Home depot opinion survey - O captain my captain discussion questions - Www sedar com search search_form_pc_en htm - Complexity of network synchronization - Frankston special development school - Community DQ6 - Phet build an atom table answers - 1 50 scale bar - Elements of longer messages report analysis - ME - Main - Dis 6 - Studies of religion 2 syllabus - Elbit security systems ltd - Adrienne rich twenty one love poems - Research Paper - Unit 2: Discussion 1 and 2 - Zane waitley cause of death - Lesson 10.3 two way tables answer key - Milwaukee carpenters union local 344 pay scale - Area of shaded region - Math forum problem of the week answers free - How starbucks growth destroyed brand value - Allen is a critique of utilitarianism - Economic plausibility of the model - Http ga water usgs gov edu wuww html - Krayzie bone clash of the titans reaction - Oclc.org - Phd university of cumberlands - Describe the moment captured in leonardo's last supper painting - Wk 4 - Apply: Signature Assignment: Globalization and Information Research - Help need for research class - English 1302 - Skeleton pattern in castingbachelor of nutrition la trobe - Warr company is considering a project - Shellharbour city council abn - Why do auditors establish a preliminary judgment about materiality - Alliteration romeo and juliet - Create your own Water Cycle - Agenda Setting - Course Reflection - English - Criminal Justice _ Week 2 - Velocity and acceleration lab - Prove the following arguments - Eduardo repetto net worth - Math practice for economics activity 14 answer key - Gibbs cycle of reflection example - Chaplet of the precious blood - Davis soil moisture sensor manual - A manufacturing firm would begin preparation of its master budget by constructing a: - Activity-based costing in service industry ppt - Rather than strong work ethic a common attitude is - Which list ranks assets from most to least liquid - Fu foundation school of engineering and applied science - Dav public school ludhiana - 561 week 5 and 6 - 2 coments each one 150 words (CITATION AND REFERENCE) - Left for dead beck weathers summary - Laboratory do's and don ts worksheet answer key - Importance of company secretary ppt - Class e amplifier efficiency - Ethical dilemmas in organization development - Provides support for the cell - English Email writing - Reebok nfl replica jerseys a case for postponement solution - Gopro case study marketing - Bisalloy 400 sheet sizes - Arabic words with kha - In which galaxy we live - Halifax quality of life survey - Jb hi-fi trade in value list - Paradox in macbeth act 1 scene 2 - Looking for Reliable Homework Help: Where Can I Get Quality Assistance for My School Assignments? - Wgu c234 task 1 - Automatic folding clothes machine - 8 steps of effective marketing communication - What is drsabcd action plan - Bohr formula for radius of electron orbit - Health administration 5 - Concentration practice problems worksheet - Flash memory inc case analysis - First person pronouns in academic writing - International journal of business and social science predatory - 3. Questions /question 1. See attachments - Integrative Intercultural Communication Paper - Ethical behavior - Spin only magnetic moment - The classical management viewpoint emphasized - Legal point of discharge maroondah - Exploring dot plots and landmarks answers