Personal risk management plan
Risk and costs happen all the time in our lives. Everyone will encounter a variety of risks. A risk management plan is a process that identifies loss exposures faced by an organization and selects the most appropriate techniques for trading such exposures. The first step for all of the risk plans is identifying the loss exposures. The first kind of loss exposure I’m identifying is health loss exposures. This kind of loss exposure can be costly, such as disability, sickness or even premature death.
The second loss exposure is property loss, such as pet damage for the apartment. I have a cat for which I have to pay a deposit for it to live in the apartment, but it may damage the apartment and that will cost me; it’s a loss exposure. Loss of equipment can be a property loss such as a lost cell phone in class, a stolen Pad or a laptop left in the library. I lost my pod before and I know I will never get it back. Also, bank accounts or online accounts can be stolen or used by someone else. Car theft or a car accident can be accounted as a property loss.
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If the car gets stolen or if it gets into an accident, such as no fault, fault with property damage or fault with bodily injury, I won’t have anything to drive. The third one, for me, is the foreign loss exposures. Because I’m from a foreign country, I have to travel to go back home so when I take the plane, some loss exposures exist, such as acts of terrorism on the plane or at the airport, accidents, and lost baggage in the airport with all my belongings inside. Sometimes, when I purchase plane tickets I also purchase the flight insurance to cover up the loss if anything happens.
Also the currency lost exposures are also under the foreign loss exposures. For example, I bought Chinese currency when the exchange rate was 1 :8 and now the exchange rate change to 1:6, I lost part of my money because of the change of the currency in the market and the possibility that the rate may keep dropping throughout times. The fourth catalog I have is the crime exposures including robbery and fire damage. In addition to the big part of crime exposures, there are Internet and computer loss exposures and identify loss, such as losing your passport or ID card.
The second step for a risk management plan is to analyze the loss exposures and he third step is to select an appropriate risk management technique for treating the loss exposure utilizing the risk management matrix. There are a number of changes of loss under the health loss exposure catalog. According to my insurance policy, sickness is identified as “Illness or disease which first manifests itself, is contracted or commences, and for which a licensed physician identified diagnosis is recorded during the period the Insured Person’s coverage is in force”.
The probability of me getting sick during the flu season is really high. I may have to go to the clinic to get reattempts and skip classes, which will cost me the chance to be in class and learn knowledge. For that circumstance, the loss frequency is low and the loss severity is not high, either. If I missed class while I was in the clinic, I could get an excuse for being sick. I could also ask my classmates for the notes and even email my professors to ask what I missed and study it by myself, after all.
Depending on the risk management matrix in the case, my getting the flu fits the retention technique. But if I get a horrible virus from the flu that causes me to stay in the hospital and be absent or a few days, the loss severity will be higher because the cost of recovery will be higher and the cure time will be longer. In that case, I need the medical insurance that Marshall University requires all the international students to have. The medical expense benefits under the policy are the maximum benefit of $250,000 per injury and sickness with the deductible of $50 per policy year.
The policy will pay 90% of the POP (preferred provider organization) allowance for covered medical expenses incurred until an out of pocket maximum of $5,000 has been met; then 100% of POP allowance is paid thereafter, and the accidental death benefit is $1 5,000 per life. From the technique of risk management, we can tell this kind of loss with low loss frequency and high severity belongs to the insurance. The insurance company won’t mind if it happened one time.
Nonetheless, this kind of loss can be avoided easily, like keeping myself warm and washing my hands more often, not going out in the public so frequently during the flu season. Damage to my 2012 Mazda 3 because of a collision with another vehicle, nature, or another hazard would be handled through this risk management plan technique of insurance. My current auto policy has both the comprehensive coverage and collision coverage with a deductible set at $1,000 on each. Bodily injury liability of property damaging limit for each accident is $25,000; medical payments coverage for each person is $5,000.
Uninsured motor vehicle coverage is If I get in an accident damaged the car and have to put it into the shop, I have the car rental and travel expenses coverage, and the insurance company will cover 80% of the rental for each day and $500 for each loss. Also the deductible is $400 on my car. Because I’m a new driver, in the case of an accident the loss severity is high. However, because I’m a new driver, I pay more attention to not cause an accident so the loss frequency is low. The appropriate risk management plan is insurance.
Online and banking accounts can be hacked easily today, all of my information can be found online. Bank cards can be copied by online shopping; some websites reveal my payment information and a few days later I received a phone call from my bank telling me my card had been used on a few websites spending a mass of money on strange things. They thought is was identity theft so they froze my account and stopped the payments and also made a cancellation. Under this condition, loss frequency is really high and the loss severity can be high as well, so the appropriate risk management technique is avoidance.
A foreign loss exposure such as currency is a high chance of loss. When I first came to the Untied States, the exchange rate between dollars and Chinese Yuan was 1 to 8. 3, it meaning 1 dollar was worst 8 Yuan. My father bought at least $25,000 and wired it to my account when the rate was around 1:8. 3, but a short time after the read, the rate went down to 1:7. China’s economy is growing, so fast that exchange rate is Just keeps dropping, so we lost some money Just because the currency rate was dropping and kept dropping.
Using the risk management matrix, you can see the loss frequency is high because Chinese money is worth more value everyday and the loss severity is also high, so the best I can do it to avoidance the loss. So now my father only transfers little amounts of money to my account and puts the majority in the bank. Once I swipe the card in the USA the bank exchanges the money with the rent exchange rate to avoid the loss exposure from the rate dropping. I currently reside in an apartment in Huntington and my rental office requires that everyone have to have renters insurance.
According the text, I would have low frequency and high severity when dealing with rental insurance. My renters insurance is through my host family’s homeowner’s insurance policy, which is provided from State Farm. My current deductible is set at $1000 and the current policy has the following covers the following: Personal Property up to $20,000, Personal Liability for each occurrence p to $100,000, Medical Payments for each occurrence up to $1,000, Credit Card/ Bank Card and Forgery up to $1,000, Damage to Property of Others up to $1,000, Loss of Use (Actual Loss Sustained) up to $500.
The current policy also has added on Endorsements, which included the following: Jewelry and Fur up to $1000, Silver/ Gold ware Theft up to $2,500, Business Property up to $1 ,500, Firearms up to $2,500, Home Computer up to $5,000, Fire Department Service Charge up to $500 When reviewing the risk management, I find out I don’t really have a lot of protection insurance. When it is time for me to implement my plans by contacting insurance agencies and finding the best one to meet my needs.
Then the step that I would take would be to go over all of my risk assessments every year to better insurance that I am getting the best deal. This would change if a major purchase occur, such as a child was born, or a newer car was purchased. My personal risk management will be easily assessed, because you continuously have to pay the bills on insurance and so you are reminded of it. However, it’s important to reconsider your policies and needs, so that you can revise your policies correspondingly.