Solving exams questions for Corporate Risk Management - Essay Example

The pure loss exposure of a company in terms of assets is that the company may lose the value of its assets to zero due to some uncontrollable risk events. The assets such as property may be lost in its value because of natural disasters such as earth quakes, tsunami etc. Example includes the companies like Nestle has big manufacturing plants internationally, that are exposed to its asset loss such as property, furniture fixtures, plant destruction etc because of uncontrollable events such as earthquakes (Williams, et al., 1998). The exposure that may arise because of the possibility of financial loss to the business is referred to as Personnel Loss Exposure.

The loss to the business because of death, retirement or sickness of the key employee of the company is referred to as personnel loss. The death of Steve jobs gave significant financial loss to Apple Inc. The reason was that the Steve jobs was considered as the one who managed Apple Inc., with his innovative ideas (Williams, et al., 1998). The exposure that may arise because of the claim against the monetary damages is referred to as liability loss exposure. It creates legal responsibility of the company or person, to pay for injury or damages to another party.

The insurance company takes the responsibility to pay off the damages against the liability created on the insurer. It refers to as the indirect loss exposure to the assets of the company. The most common example of consequential loss is the firm losses his clients and business because of street closure or strikes. Therefore, the consequential loss exposure is the exposure to the implied losses that may arise due to unexpected circumstances. The firm may abandon the loss exposure if the exposure already exists.

This can be explained with the help of example of pharmaceutical company, which may not sell particular product because the chances of loss