Competency

Construct a framework for identifying, evaluating, and categorizing risk and risk management tools.

Instructions

LTD Acceptance is a private property and auto insurance carrier thatspecializes in sports cars and motorcycles. This organization is ownedby LTD Capital, a large equity group with over 15 holdings. LTDAcceptance is the parent company's single largest holding as it drives70% of total revenue. Due to the inherent risk involved in that segmentof the market, many of LTD Acceptance's competitors do not offerpolicies for sports cars or motorcycles. This market segment isunderserved which is why the organization has 20,000 active policies fora sports car or a motorcycle.

LTD is headquartered in Houston, TX. LTD does not sell insurancedirectly to the public. Instead, it uses third-party agents to sell itspolicies. LTD handles all customer service needs including claimsintake, policy services, and general questions. The company operates infour states: California, Texas, Louisiana, and Florida. Currently, LTDdoes not have an active system in place to ensure that its agents are infact using LTD guidelines to screen potential policyholders. However,no evidence of negligence has emerged so far as the organization has yetto have a year in which it was not profitable. LTD has also had thegood fortune of not suffering losses because of natural disasters orcatastrophic events.

In your first days of your new role as the senior risk analyst, youknow your first task is to complete a framework for adequatelyidentifying risk exposures. During this process, you realize that manyof your counterparts lack the basic understanding of how to identifyrisks. Your supervisor has come to you and asked for a report outliningthe importance of identifying risks to support risk managementactivities and positively impact the company's bottom line. If yourcounterparts do not understand your report, you know that you will haveminimal support in your efforts to manage the organization's riskseffectively.

For your report, you have been asked to analyze and address the following:

• Why is identifying risk exposures significant? What are theramifications for organizations that fail to properly identify risksthey are exposed to?
• What are the market risks LTD encounters?
• What business risk does LTD encounter in its day-to-day operations?
• What compliance and human capital risks might LTD face?
• How do risk management activities correlate with overall productivity?

The format for your report should be in the business, professional style. For help with this format, please click here.

APA FORMAT