Corporations can purchase insurance as a means of reducing their risks. What are the primary limitations on the extent to which insurance can reduce the risks faced by a corporation?
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Insurance is generally utilized as a hedge against unforeseeable consequences, such as fire, accidents, disasters, etc. Corporations, depending upon their line of business, can invest in a number of insurance vehicles to mitigate various risks - this includes standard disaster and government-mandated insurance, such as commercial automobile liability and workers' compensation insurance, but also extends to voluntary coverage such as commercial multi-peril, ocean marine coverage (if engaged in shipping), medical malpractice (if in the health services industry), product liability insurance, professional liability insurance (including extending to ...
Solution Summary
Insurance is generally utilized as a hedge against unforeseeable consequences, such as fire, accidents, disasters, etc. Corporations, depending upon their line of business, can invest in a number of insurance vehicles to mitigate various risks. This response details many of these ways.
... internal control system, it reduces liability ... a certain dollar amount, which would substantially reduce risk. ... the company will drastically reduce potential risks...
... to the re-insurer with an aim of reducing the rate of ... has a goal of ensuring that the existing level of risk exposure to scenario such as losses is reduced. ...
... history, prophylactic mastectomy can significantly reduce the incidence ... is very effective at reducing the chances ... is extremely effective and reduces the risk...
... implemented in the market by reducing equity prices ... Wealth effect: lower price levels reduce wealth, which ... traders to sell even at substantially reduced prices. ...
... is a well-known method for reducing market risk... By decreasing its debt, a business can reduce its level ... maintain high cash flow, which in turn reduces its need ...
... Consumer surplus is reduced in most cases - representing ... hardest decision to make about reducing, given the ... this category should definitely reduce, since blood ...
... c. What are the alternative methods of handling the risk? ... Advantages: Insurers can transfer risks that are linked to ... by doing this they can reduce the problems ...
... Furniture: Optimal WACC, valuation techniques to reduce risk, NPV. ... use of multiple valuation techniques in reducing risks. ... 789.00 789.00 Prices are reduced by 10 ...
... Increase in the amount q will reduce the y1 and increase the y2 ... not exist the equilibrium will fail to exist, as only high risk will get insurance and the ...
... In managing risks, managers have the following options: Accept the risk yet continue ... steps to eliminate the threat Reduce the probability of ...
