The City Bus Corporation Case Study
The City Bus Corporation provides school bus transportation to public schools in Lancaster County the city owns fifty buses that are garaged in three different cities within the county. The firm faces competition from two larger bus companies that operate in the same area. Public school boards and private schools generally award contracts to the lowest bidder, but the level of service and overall performance are also considered. The risk manager should follow these steps to help reduce risk for the company. They are Identify loss exposures. By looking at where a loss can happen at around the business. By looking at different area around the business. Building and the financial statements helps the risk manager better understand what type a loss that can happen. By doing this and making a list to go through and list out all of the exposures helps risk manager better understand the company risks. Identify all major and minor loss explores to a business like property, is the ground and walk ways in good order. Is the building in good repair? Does it look nice on the outside? Is it lock up at night? These are just some of the risks for buildings. What of the liability of the buses are they in good repair? Do they have good records kept on them? Are the people working on them certified or not. Are they clean? What about the drivers do they have good license? What are their driving records like. All of these fall under the legibly of the company Are we able to make money if we have a low bid? If so what will the business income come out too? How many people can we have on staff to make money? Are we cutting too many things and not having people with skill to work for us or are they going to steal instead because we are paying too low of a wage. What about the area of our garage is it in a high crime area? Are the buses safe at night or will they be vandalize by kids or gangs trying to tag them. Are they kept under cover so that if we have a hail storm will that not get damaged? Or by a tree falling on them Employee benefits do we have too much or not enough. Are we completive with other companies with what we offer of employees’ benefits? Are we making sure they are paid on time and that they money is going to the right account. Are we paying are taxes on time as well By doing all of this the risk manager helps to reduce the exposure to the company. But there is more that can be done. It is only looking to see where the risk are above now his need is to start addressing it By doing this he will need to have all the manger on board looking and helping to address an and all risk that can happen and getting feedback from the different mangers helps. Having all departs like the bus garage manager, personal manger, and accounting manager as well as the manager for the driver meet and work together is important for the City Bus Corporation to provide all best possible service at the lowest price. Also he should measure and analyze the loss exposures. It is important in order to manage them properly this step requires an estimation of the frequency and severity of loss. By know these and keeping a record helps with determining what they risk are and how much each one will cost. By electing the appropriate combination of techniques for treating the loss exposures. These techniques can be classified broadly as either risk control or risk financing. By classifying them they can be divvied up among the departments to address with a check list as to when hey will be addressed. By doing this is helps with making each department more responsible for their risk and for making sure that the risk does not have. Implementing and monitor the risk management program this step begins with a policy statement this is necessary to have an effective risk management program in place. By this statement outlines the risk management objectives of the firm, as well as company policy with respect to treatment of loss exposures. Describe several sources of funds for paying losses if retention is used in the risk management plan. Pay losses out of current cash flow. This would hurt the company cash flow but it can be done for small risk. By also establish a founded reserve is case of a risk happens. By a nice saving account for if a need happens helps a company but it will affect the balance sheet as well. A company can also borrow from a bank by arranging a credit line in advance of a loss. By having a ready reserve does help a company for when cash is need on the spot and it is a large amount. The company may be able to join a trade association that owns a captive insurer. Or just by having regular insurance as well like worker comp or an insurance policy for the building and buses in case of an accident. Not only that a company can also have captive so that they have less of a liability for the business. These are just some of the major loss that City Bus Corporation could face. These are examples or ideas for each technique(s) or risk that they could face. For example, if the risk is theft, technique is loss prevention, an example is a fence. Please see more examples below: TheftLoss prevention & insuranceInstall fence & purchase insurance Direct physical damage to a bus like fireRisk financing (transfer of risk)Commercial property insurance policy. Place extinguishers in each bus. CollisionLoss-preventionTake a safe-driving course
Suits for injuries to a children in an accident Loss reduction (loss-control) Defensive driving course. Pour health of the driverLoss preventionAnnual physical exam Bodily injury or property damage to othersLoss-reduction (loss-control)Avoiding hiring drivers with poor driving records Driver may be injured in an accidentLoss reduction (loss control)Workers compensation insurance Bus can be damage (brake down)Loss-reductionInspecting the bus frequently. Maintain the bus in good conditions.
Legal expenses like payment of attorney feesLiability loss exposures
By having all of these prevention in n place will not make all the risk go away. But what it will do is make it where the risk are lowered. Also this will help keep cost at minimum amount by making sure things are done in a time manner. Where repair are made right away instead of putting things off. If they repairs are not made right away it would end up costing the company more money in the long run then if repairs were done right away. The risk manager will also have to make sure that they have enough insurance to cover any risk that may come up. By having all insurance to cover a risk or having coinsurance helps the company from losing too much income. Therefore then the company is not cutting conoers to make a profit and causing more problems and risk to happen and more losses to the company. By making sure that a plan is in place and making sure that they buses are serviced in a timely manner. By take care of and having a good record helps the City Bus Corporation in getting their contract. And being able to keep the contract in the long run. By having people who will work together to get the job done and done right the first time. Makes it pleasure to work with the company and that is important as well.
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