SECTION B Instructions: Answer any three (3) questions from this section by typing the response under each question 1. Several types of risk are present in your countries' economy. For each of the following identify whether it is a pure risk or a speculative risk. Explain your answer with reference to the definitions for pure and speculative risk a. A house may be severely damaged in a hurricane. b. A family head may be totally disabled in a plant explosion c. An investor purchases 1000 units of Grace Kennedy's shares. d A worker on vacation plays the slots machines at the casino (12 marks) 2. Question: a Distinguish between Pure Risk and Speculative Risk and give an example of each. (2 marks). b. Explain the difference between a peril and a hazard and give an example of each. (2 marks) c. Briefly explain FOUR (4) methods of identifying risks (8 marks) 3. You are an Administrative Assistant at a manufacturing plant Recently, several organizations in the region have experienced fire outbreaks resulting in a lot of damage to property and life. The Managing Director of your organization discovered that you are undertaking a Risk Management and Insurance course at the Duncan's Community College Evening Institute and he is asking for your professional advice on what the company could do to avoid or minimize the impact of loss from a fire outbreak at the plant. Write a report to the Managing Director outlining the following: a Distinguish between real property and personal property, giving one (1) example of each. (4 marks) b. State two (2) types of property that are not insurable. (2 marks) c. Discuss two (2) risk management techniques that could be used to address the risk of a fire outbreak at the plant. (6 marks) 4. Mr. Moore is the risk manager for Market Telecom. At Market Telecom, the Human Resource Department is responsible for employee benefits and the risk management department is concerned with property and liability exposures only. Late last year, Market Telecom added an off-site day care as a new employee benefit, to employees who have children. Mr. Moore was not made aware of this new benefit or its location. a. Explain why Mr. Moore should have been informed about the existence of the off- site day care center? (7 marks) b. The law of large numbers forms the basis of insurance. Explain. (5 marks) 5. Individuals who are in charge of handling loss exposures for an organization are called "risk managers." a. Why is the identification of hazards important in risk management? (2 marks) b. Why is the preparation for perils important in risk management? (2 marks) c. What effect does frequency of loss and severity of loss have on the risk management process? (2 marks) d. Describe three (3) physical hazards that may confront the risk manager of your college. (6 marks)