Consider the following three events:

1) An insurance company loses $5 billion due to an earthquake in California.
2) An auto manufacturer loses $5 billion from a lawsuit relating to safety flaws of a new car design.
3) A food processing firm loses $5 billion from a hedging trader speculating in the coffee and sugar markets. 

You have an equal allocation (1/3 to each firm) of dollar investments in the three firms. Discuss the following three questions:

1) Which loss or losses are you more concerned about?

2) For each of the three losses discuss either why you are concerned or why you are not concerned.

3) What are the risk management issues you can point to in these firms and how would you mitigate any of the issues? 

Answer rating: 100% (QA)

Which loss or losses are you more concerned about I am most concerned about the loss of the insurance company due to the earthquake This is because earthquakes are a natural disaster that can happen w... View the full answer