Intro to Risk homework #2 PDF

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Answers for homework #2. Professor Mccloskey...

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Refer to the article Risks Under the Big Top (Topic 3). Give an example of each one of the following loss exposures faced by the circus: Property loss exposure, Liability loss exposure, Net Income loss exposure and Personnel loss exposure. In each case, you should give the example AND briefly explain why your answer is an example of the loss exposure in question. This is fairly obvious in some cases and not so obvious in others. (12 Points) a.

Property loss exposure i.

A property loss exposure faced by the circus was when the train derailed in

Florida. The train is considered a personal and tangible property loss of the Ringling circus because the train, along with other circus equipment was damaged during the accident. A property loss exposure is a condition that presents the chance of a loss for an organization in which the property has financial interest. The train, physical property of the circus, was the key method of transportation for Ringling, making it of financial interest for Ringling. b.

Liability loss exposure i.

A liability loss exposure was faced by the circus when the bolt broke off from the

high wire apparatus which caused one of the performers, Sasha, to fracture his pelvis in 1983. It was Ringling’s job to ensure a safe performance for both employees and spectators. Any damages that are as a result of defective or malfunctioning equipment, the circus for which is held liable. Liability loss exposure is a situation that raises the chance of a claim declaring legal responsibility of an organization for an individual’s damage. c.

Net Income loss exposure i.

A net income loss exposure was faced by the circus when the event of the train

derailment in Florida took place. This loss had many impacts for Ringling. After the crash, Ringling set up a disaster office onsite and hired counselors to care for circus employees, families, and animals. Additionally, the train was a year-round home and storage unit for 88 of Ringling’s employees and equipment for which they had to make new accommodations for this circumstance. The article reveals

that the show was back on the road within 72 hours of the accident. It is fair to conclude that Ringling may have missed a performance or two which would

result in a loss of revenue. These are large increases in expenses and decreases in revenue for Ringling that would have not arisen if the accident had not occurred. An increase in expenses decreases along with a decrease in revenue results in a decrease of net income. This fits the definition of net income loss exposure, a condition in which the net income is negatively affected by an initial loss. d.

Personnel loss exposure i.

A personnel loss exposure faced by Ringling was when Mr. Chipperfield’s stunt

did not go as planned. Once, the elephant hit the teeterboard too hard which caused Mr. Chipperfield’s injury of a broken ankle. Mr. Chipperfield suffered a personal loss, while the circus also suffered a loss. As stated by the article, “animal acts, of course, are an integral part of ‘The Greatest Show on Earth.’” When a personnel loss exposure occurs, an organization is deprived of a key person’s skill that the organization cannot readily replace. Mr. Chipperfield was a key employee in relation to this stunt. He suffered a loss that kept him from performing this significant trick until he was healed. When a company experiences a personal loss exposure, a personal issue for and employee becomes a business issue....