The risk management department is headed by the risk manager and its one of the many departments in an organization.Functions of the risk management department and how these functions impact either positively or negatively on business performance are:
The risk manager and his department are responsible for identifying the various risks that the business is likely to face and by so doing the business gains a better understanding of the risks it faces and therefore come up with different ways to protect themselves against this risks.
The risk management department is responsible for determining how much should be spent on risk management when doing this analysis the department considers the frequency that the loss might occur and the magnitude of the loss,in so doing the department ensures that a lot of money isn’t spent unnecessarily thus the organization is able to use this money to meet other business needs.
Another responsibility of the department is to keep up to date on all the operation within the company and of ensuring that the risk control measures which have been decided upon are infact implemented.The organization is able to minimize the chances of risks occurring thus ensuring that the business performs as required hence impacting positively on the performance of the business.
4)MANAGING INSURANCE PORTFOLIOS
In managing insurance portfolios the risk management department duties include
a)Assesing the need for covers of different types:By doing this the department is able to determine which insurance covers are the best for the different risks that the organization faces in so doing business performance is improved since they’ll be less fear in implementation of projects as the other departments will know that they are covered.On the other hand if the department does a mistake and picks wrong insurance covers then the business is likely to suffer losses incase the risk occurs.
b)Evaluating premiums and negotiating on prices
The department is responsible for ensuring that the premium that the business is paying are not too high and if the insurance company that they insure with is charging a very high amount it’s the departments responsibility to negotiate on behalf of the business so as to bring the charges down to the levels that the business can afford.
This helps the business not to overspend on premiums hence saving the business unnessary expenditure the money saved helps the business in meeting its other needs.On the other hand if the Risk manager doesn’t negotiate on behalf of the business then the business pays too much on premiums hence eating up into the business’s finances unnecessarily.
SELECTING INSURERS AND BROKERS
It’s the responsibility of the risk management department to select the best insurers and brokers for the business this will impact positively on business performance in that with good insurers the business is safe and in the event that the risk occurs then they are compensated fully thus protecting the business against loss.
On the other hand if the risk management department chooses a wrong insurer/broker then the busness is likely to suffer from losses in the event that the risk they are being insured against occurs and hence impacting negatively on business performance.
In Kenya today,insurance companies have embarked on extensive marketing of their products as well as increasing the premium rates of private cars from 4.5%-7%.Discuss the factors which have led to this despite having many players in the industry.
The factors that have led to the increase in insurance premiums rates of private cars is that there is an increase in the risk...