Exam 2 Topic 9 Overview of Risk Individuals Categories of risk on individual level Property Liability Life Health Financial these categories may not be mutually exclusive Module 7 Property Real Property Land Buildings Crops Personal Property Jewelry furniture art autos Causes of loss Fire Theft Lost etc Financial Consequences Reduction in property value increased expenses lost income Insurance key to financial loss of property Liabilty Asset exposed to loss Money Cause of Loss General Damages pain and suffering Special Damages lost wages due to car accident Punitive Damages Punishment payments to make sure you don t do something again Claim Lawsuit Civil law treating each other the way you should based on society Criminal law committing a crime that isn t civil breaking a law Contract not following given set of rules agreed upon Tort Negligence driving over the speed limit Financial Consequences Defense costs Monetary Damages Specific Types of Liability Property owners responsible for dangers on your property Automobiles Employer employee i e sexual harassment Animals exotic pets or dog biting someone Life Premature Death Assest Exposed to Loss your life Cause of Loss Premature death Illness accident stupidity Financial Imact of Premature Death Wage earning adult Married single w dependents single w no dependents Non wage earning adult Married single w dependents single w no dependents child Asset exposed to loss Your savings retirement wealth Cause of loss outliving assets expenses income for too long Financial Consequences What happens when retired Income Expenses Which increase decrease Life Long life Health Asset exposed to loss your health livelihood Cause of Loss poor care poor genes bad luck injury illness Financial Consequences Ability to earn income may decrease or cease as in premature death living expenses may continue evaluate same exposure categories as premature death Financial Asset exposed to loss your wealth Cause of Loss health disability unemployment poor planning Financial consequences inadequate savings back to work cant retire Risk Management Process Determine objectives Identify risks evaluate risk choose alternatives implement review and evaluate How do you apply it How do you evaluate Frequency severity Death only happens once but probability does vary Severity based on wealth and income Topic 10 Is the Use of Smart Pills Dangerous First article of yes no variety 2 different risk reward associated w cognative enhancement pills are explored What are smart pills Stimulant drugs such as Ritalin and Adderall Schedule 2 drug same as cocaine Illegal without prescription Helps focus improves performance on some learning tasks What is the risk Insomnia weight loss decreased appetite jitterniness Increased risk of cardiovascular problems Potentially addictive Decreased performance over time Paranoia aggression irritability What is the reward Improved performance on learning tasks such as memorization especially for longer term memory and since education now seems to be a competitive sport Need to be on drug while studying not when taking exam Not clear you can remember more stuff at one time Who is using it You are prescription doubled from 2007 2011 25 to 35 percent college student have used 3 to 4 percent of population are adhd skewed toward younger children Users more likely to Smoke weed Skip class Lower GPAs The Reading Yes Alan Schwarz they are Case on Richard Fee academic scholarship college class president baseball player Addiction to Adderall commited suicide 2 years later Points out problem in health care system Quick diagnosis Ability to manipulate symptoms quick to medicate doctor shopping The Reading No Joshua Gowin no different then any other stimulant Take aways Risk reward tradeoff Benefits real Risks real Is it cheating Is it ethical Module 8 Topic 8 Overview of Risk Overview of Risk for Corporations Lots of ways categories of looking at risk at the organizational level Business operational hazard financial and strategic risk Why categorize Expertise risk management techniques reports to stakeholders Categories may not be mutually exclusive Business Risk Possibility to a company will have a lower than expected profit based on risk Deviations in profitability Can be caused by many things prices regulation competition Very broad category many will define as risk caused by operational hazard financial or strategies Operational Risk Focus of BP case and Analytics readings Potential losses from internal sources Manufacturing process Fraud Mismanagement Employee mistakes Hazard Risk Very traditional risk management stuff Very personal safety focused Typically used in insurance industry to descrive potential losses that only have a down side Pure Risk ex fire auto accident tornado earthquake Financial Risk Potential variation due to financial causes Losses due to exchange rate investment losses credit risks liquidity risks Strategic Risks Potential losses from poor business decisions Product mix Supplier choice Financing options Many decisions fall under strategy if any of them are wrong faulty strategic risk I often lump reputational risk under strategic risk but is often a separate classification Topic 8 BP Putting Profits Before Safety Two Specific Incidents March 25 2005 Explosion at Texas City refinery 15 dead 170 injured March 2006 Oil Spill at Prudhue Bay Alaska Jan 2007 Ceo Browne Resigns Background BP formed in 1998 Merger of British Petroleum and AMOCO Top 5 Global Oil Co British Petroleum over 100 years old Browne became CEO in 1995 Rebranding Enviromentally friendly oil company Health Safety and Envirnomentally performance Growth through M A Green Company Climate Change talk in 2002 Alternative fuels Solar Public Relations Perspective Increase in brand value Many lauded BPs approach Some critics greenwashing How can an oil company be green Corporate Strategy Perspective Growth through M A Do more with less Cost cutting Cost conscious What effect does Corporate Strategy have on Corporate Culture Workplace Safety Process Management The First Event March 23 2005 Was Safety First OSHA Explosion Texas City Refinery 15 dead 170 injured 1700 lawsuits 21 3 million dollar fine by OSHA 300 willful violations of OSHA rules US Chemical Safety and Hazard Investigation Board BP endangered workers to cut costs 23 accidents in 30 years 8 severe incidents in 10 years leading up to explosion CSB Report Con t Lack of safety leadership inadequate resoures for
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