There are several techniques available for managing risk. For

each of the following risks, identify an appropriate technique, or

combination of techniques, that would be appropriate for dealing

with the risk.

a$.$ A family head may die prematurely because of a heart

attack.

b$.$ An individual$$s home may be totally destroyed in a

hurricane.

c$.$ A new car may be severely damaged in an auto accident.

d$.$ A negligent motorist may be ordered to pay a substantial

liability judgment to someone who is injured in an auto

accident.

e$.$ A surgeon may be sued for medical malpractice.

$4.$ Andrew owns a gun shop in a high$-$crime area. The store does

not have a camera surveillance system. The high cost of burglary

and theft insurance has substantially reduced his profits. A risk

management consultant points out that several methods other

than insurance can be used to handle the burglary and theft

exposure. Identify and explain two noninsurance methods that

could be used to deal with the burglary and theft exposure.

$5.$ Risk managers use a number of methods for managing risk. For

each of the following, what method for handling risk is used?

Explain your answer.

a$.$ The decision not to carry earthquake insurance on a

firm$$s manufacturing plant

b$.$ The installation of an automatic sprinkler system in a

hotel

c$.$ The decision not to produce a product that might result in

a product liability lawsuit

d$.$ Requiring retailers who sell the firm$$s product to sign an

agreement releasing the firm from liability if the product

injures someone