I need a 100 word reply to each of the following DB post. It looks a lot longer than it is. I only need 800 words total for this project
The first four are from a finance – risk management class. The last 4 are from a Personal Financial Management class.
Forum Post #1
Risk management can assist an organization by identifying potential losses and executing techniques to either prevent the losses or better handle the losses (Rejda, 2011). The techniques used to address risk can be used in combination with each other to obtain the best results. The text discusses an example of a chain of restaurants that is having a variety of issues, including employees stealing money (Rejda, 2011). A technique that could help prevent those losses could be having less money available, meaning keeping less money in the registers. Another possible technique could be only letting higher level employees handle the money at the registers. Both of these techniques are loss prevention techniques because they would reduce the frequency of the money being stolen (Rejda, 2011). A technique that could combine with the previous techniques could be noninsurance transfers, which means the risk and the financial consequences are transferred to someone else (Rejda, 2011). In the scenario of the restaurant chain, if money went missing during someone’s time working the register money could be deducted from their pay equally the amount of missing money. There are some execution obstacles with all of these different techniques but the point of risk management is to go through the entire process to decide which techniques would best cover the organization from risks, or potential losses (Rejda, 2011).
Rejda, George E. (2011) Principles of Risk Management and Insurance 11th edition. Boston, MA. Pearson Education Inc.
Forum Post #2
When examining risk exposure from the standpoint of a hospital, there are countless situations that will create a material risk. One of the biggest risks a hospital incurs is malpractice. Malpractice are, primarily, the result of an employee acting negligently. There are a few ways that the hospital could minimize the risk exposure; they are avoidance, loss control, and insurance (Redja, 2011).
The first two ways a hospital can manage the risk of malpractice lawsuits is to try to make sure that it does not encounter them at all or reduce the likelihood of it occurring (Rejda, 2011). While totally avoiding malpractice is impossibly difficult, there are a few steps that can be taken to work toward reducing its frequency. Perhaps the easiest ways to avoid malpractice is to hire the best possible employees and implementing strict standard operating procedures.
From the perspective of an individual doctor or surgeon, purchasing malpractice insurance is a necessity. The sums associated with malpractice lawsuits can be overwhelming and, thus, require doctors to transfer some of the risk to an insurance company (Rejda, 2011). The hospital itself will need to carry insurance for the inevitable event of it receiving a lawsuit from a disgruntled patient.
Rejda, George E. (2011) Principles of Risk Management and Insurance 11th edition. Boston, MA. Pearson Education Inc.
Forum Post #3
In the article “Risk Masters’ Chart Course for Developing Risk Capabilities” by Culp (2014) discusses certain challenges which can encounter during the process of implementing risk management, which include internal impediments, recruiting, retaining, and training staff, and high expectations for return. The first step companies take is to getChief Risk Officer which has the title “Risk Master”, which is the person which identifies the risks and puts measures in place to minimizes the risks or completely avoid the risk in addition he works with board of directors (Culp, 2014)
Risk Masters are known to implement and maintain their risk management strategies in comparison with other companies. The reason for this is because their risk management strategies are incorporated in the high level of the management (Culp, 2014). This is reached throughout communication from the top level all the way to the bottom with no influence from other officers. Risk Masters are more concerned with avoiding further risks than anything else, there traits lay in adopting the necessary skills to analyze the problem and data. (Culp, 2014).
With the unknown in the future it is hard to obtain steadiness in a strategy so a Risk Master needs to flexible and needs to able to implement the strategies. Most strategies need to be approved by the board of directors which gives not a lot of room to play. Unforeseen factors can include economic changes, or the switch of leadership, companies need to have a strategy in place of these occurrences, so that the company is not affected tremendously and can continue to operate without any loses.
Culp, S. (2014, January 15). ‘‘Risk masters’ chart course for developing risk capabilities. Forbes. Retrieved from http://www.forbes.com/sites/steveculp/2014/01/15/risk-masters-chart-course-for-developing-risk-capabilities/
Forum Post #4
It is important for all businesses to implement a continuity strategy for their organization, and although every business should have one, most will be different in some facet. Some challenges which accompany the implementation of such a plan would be the lack of education, and or knowledge, of how to construct such an item, relaying its importance to board members, acquiring a standard of acceptable and unacceptable risk (Culp, 2014).
One way to manage all aforementioned items would be to hire a competent Chief Risk Officer (CRO) who would be in charge of a group, or section, of people to sort through these issues. The CRO would develop a training plan to ensure that each person understands their role and responsibility to ensure their section stays on track. The CRO would also lead the charge in creating a continuity strategy, along with the assistance of a few other departments to ensure predictable that all risks have been assessed and accounted for. There may be a bit of hindrance in the execution process due to unforeseen circumstances, or the manner in which they happen. It would be up to the CRO to express these concerns to the board on a monthly basis to ensure they understand past, present, and future risks for better progression, while addressing said issues, it would be at that time the board would provide suggestions to the CRO for corrective actions for such matter.
If a continuity strategy is not implemented, the company could end up overinvesting in high risk stocks, causing potential failure. Another item would be the lack of preparation in the event of an untimely demise of one or more company leaders, and without an appropriate leader in place, the company could lose business or standing in their industry and among investors. The lack of planning could also lead to a failure due to unaddressed current/future risks which may drastically impact their product or service.
Reference:
Culp, S. (2014, January 15). ‘‘Risk masters’ chart course for developing risk capabilities. Forbes. Retrieved from http://www.forbes.com/sites/steveculp/2014/01/15/risk-masters-chart-course-for-developing-risk-capabilities/
Rejda, G. (2011). Principles of Risk Management and Insurance, 11th Ed. Boston, MA: Pearson Prentice Hall.
Forum Post #5
For this discussion it gets a little tricky for me being that I do have the VA loan available to me which means I would not have to make a down payment. I am currently stationed in Jacksonville, FL and live near Fleming Island. As of right now the average sale price has gone up 18.5% in the last five years, but is still not as high as it was from 2006-2007. One thing to take into consideration is that prices are still relatively low and are at a slight increase, but the downside is that the amount of homes being sold is at a decrease. One big reason that people prefer to buy is the sense of pride in owning your own home. The market also has the opportunity to rise from when you made the purchase, but again it can decrease. Another huge thing with owning a home is that you can have a financial benefit from the deductibility of mortgage interest and real estate tax payments for federal income taxes. Again a house can be a financial investment that pays off depending on the appreciation. People often prefer renting because you usually pay a security deposit which is often the price of the rent or lower whereas buying a house you have to pay a down payment and closing costs which could be several thousands. It is also convenient that with renting most maintenance is covered and buying a house it is your responsibility to fix the discrepancy (Kapoor, 2012). For me, buying a house would not be a smart move for me. Being in the military, I move around a lot and personally I do not want to be attached to this state in anyway when I leave. I do plan on buying a house, but I prefer the mobility that renting offers. As the text says, it is smart to buy a house where you plan to live for a long period of time. I do think now is the time to buy because of the crash in housing and that it is at an increase, but for me it’s just not the right time.
References:
Kapoor, J.R., Dlabay, L.R., & Hughes, R.J. (2012). Personal Finance (10th ed.). New York:
McGraw-Hill Irwin. ISBN: 9780073530697
http://www.trulia.com/real_estate/Fleming_Island-Florida/market-trends/
Forum Post #6
There are advantages and disadvantages to both buying and renting a house and each person needs to determine which option would work better for them. Someone not wanting to stay in one area for a long period of time would be better off renting and someone wanting to start a family and stay in the area for awhile would be better off buying. In my situation I need a larger house since I have a large family. In Colorado Springs the median sale price for a house is $239,900 (PPAR, 2016). The median rental price is $1,345 (Zillow, 2016). In Colorado Springs for my family situation average mortgage rates would be about 3.2% making a payment about $1,044 per month (Zillow, 2016, 1). It makes more sense for me to buy a house than it would be to pay to rent a house with the amount of space I would need. The decision to buy a house comes with many different things. Obtaining a loan is a very thorough process that goes through all of the financial aspects of your life. There are various fees associated such as appraisal fee, inspection fee and closing costs. In my situation I am able to get a VA loan which helps to minimize the fees associated with buying a house. My realtor also can work in that the seller will pay for the closing costs on my loan. This will leave me with very little out of pocket expenses when it comes time to close on my loan. Property taxes and insurance are a cost that can be included in the escrow part of my loan and included in my monthly mortgage payment. This is something that works better for me so I do not have to come up with one lump sum of money at the end of the year to cover these costs. After owning a house there are many tax benefits that I will get at tax time. Mortgage interest and property taxes can be tax deducted as well as credits for making energy efficient upgrades. As the amount owed on my home loan decreases and I keep my property in good condition the house should appreciate in value and I would have more and more equity in my house each year.
Pikes Peak Association of Realtors. (2016). PPAR statistical highlights. Retireved from http://ppar.com/Statistics.aspx
Zillow.com. (2016). Colorado springs home prices & values. Retrieved from http://www.zillow.com/colorado- springs-co/home-values/
Zillow.com, 1. (2016). Home point financial corporation. Retrieved from https://www.zillow.com/mortgage- rates/co/colorado-springs/#purpose=Purchase&filters=339944&request=ZR-HTXNVJMR"e=ZQ- QDJMHDNH
Forum Post #7
Being in the Marine Corps and completing two deployments, it is an absolute must that I have life insurance especially with a wife and child. As of right now, I have the Servicemembers Group Life Insurance (SGLI). I have the option to have coverage from 25k to 400k. I chose the full 400k and have to pay 29 dollars a month. Since I am thinking about getting out of the military, I do have the option to transfer to Veterans Group Life Insurance (VGLI). I will probably take this route because it is a significant amount of money and the monthly payment is reasonable. If I did not have the option, I would most likely choose the easy method. This is when your family will receive 70 percent of your salary for seven years (Kapoor, 2012). I prefer this because my wife will be done with med school before seven years and it would allow her to remain comfortable until she is ready to work as a doctor. I prefer whole life insurance because you never know what could happen on any given day. Once my son is out of the house and successful, I would consider the Dink Method because my spouse will be working and financially stable. This way we could determine what debts we have and how much funeral expenses would cost. This could be a smart move because depending on how much we need, the premium each month could be low. This was a great discussion because I honestly didn’t even know that much about my life insurance and what the military offers after. I also use to think life insurance was based on how much do you need and that it was usually a one lump sum payout.
Resources:
Kapoor, J.R., Dlabay, L.R., & Hughes, R.J. (2012). Personal Finance (10th ed.). New York:
McGraw-Hill Irwin. ISBN: 9780073530697
http://www.benefits.va.gov/insurance/sgli.asp
Forum Post #8
Our text reads “Most people buy life insurance to protect someone who depends on them from financial losses caused by their death” (Kapoor, Dlabay, & Hughes, 2012, page 407). When I was in the military, I had a $250,000 life insurance policy with a company called Military Benefits Association and that amount would help pay off any remaining debt in the event I passed away. When I separated and no longer had the automatic deductions going towards that policy and they cancelled it instead of calling me to find out what happened. I also found out they did not provide policies to veterans. I decided after a few months (especially with my husband going to Korea) that I needed a new life insurance policy. I chose to go through USAA (my bank) and get a $250,000 term life policy. I also had a $100,000 whole life at the time, but that was a little more than I could afford. For both it was $120/month and the term policy alone is only $50/month. I decided the term policy is right for me right now. It will still help my husband pay off any debts, as well as putting $25,000 into two trusts for each of our boys. When I finish school and find my new career, I will look further into a better policy that will cover all areas my family may need help with. Whether that be continuing my term policy and adding a whole life policy again, or changing it to just a whole life or universal life policy. I will not invest in a variable life policy because returns are not guaranteed (CNNMoney, 2015, para 4).
Reference
Kapoor, J.R., Dlabay, L.R., & Hughes, R.J. (2012). Personal Finance (10th ed.). New York: McGraw-Hill Irwin. ISBN: 9780073530697
CNNMoney. (2015). Life Insurance: Types of life insurance policies. Retrieved from http://money.cnn.com/pf/money-essentials-life-insurance-policies/
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