Financial Risk Management Paper
Description
LTD Acceptance is a private property and auto insurance carrier that specializes in sports cars and motorcycles. This organization is owned by LTD Capital, a large equity group with over 15 holdings. LTD Acceptance is the parent company’s single largest holding as it drives 70% of total revenue. Due to the inherent risk involved in that segment of the market, many of LTD Acceptance’s competitors do not offer policies for sports cars or motorcycles. This market segment is underserved which is why the organization has 20,000 active policies for a sports car or a motorcycle.
LTD is headquartered in Houston, TX. LTD does not sell insurance directly to the public. Instead, it uses third-party agents to sell its policies. LTD handles all customer service needs including claims intake, policy services, and general questions. The company operates in four states: California, Texas, Louisiana, and Florida. Currently, LTD does not have an active system in place to ensure that its agents are in fact using LTD guidelines to screen potential policyholders. However, no evidence of negligence has emerged so far as the organization has yet to have a year in which it was not profitable. LTD has also had the good fortune of not suffering losses because of natural disasters or catastrophic events.
LTD Acceptance has 18,000 active policies in its book of business, and the firm is yet to experience a year period with high loss ratios. To increase its profitability ratios, LTD has invested the premium dollars across various asset classes. LTD’s Chief Financial Officer (CFO) believes the organization should take a calculated risk and allocate the assets more aggressively. As the senior risk analyst, you have carefully analyzed the organization’s numbers and strongly believe that LTD’s favorable loss ratios are a result of chance and not through the sensible use of the firm’s systematic framework for managing risk. You also believe the CFO is purely looking at the rewards and not the risks. Therefore, you do not believe the firm should increase risk exposures at this time.
To convey your point of view, you have decided to conduct a cost-benefit analysis report which should include the following:
- For this report, provide an introduction which discusses the relationship between risk and reward. Using the information provided in the background of this case, explain why the organization may appear to be in a better position on paper than it really is. Include possible causes of this position to highlight the importance of risk management.
- Include at least two ways how each party listed below can be adversely impacted if the organization suffers losses as a result of a more aggressive approach.
- Policyholders
- Shareholders
- Vendors
- Creditors
- Employees
- Also include a discussion on how effective financial management aligns with overall risk management.
- Your conclusion should highlight how the risk assumed in an organization’s activities should be consistent with its long term goals. All business activities include inherent risks. Thus, all the activities and risks the firm takes should help them reach their long-term goals. If the managers engage in activities that create risks outside of this scope, it can create problems. For instance, most firms have the goal of driving sustainability. However, if they are highly leveraged, then seeking additional credit for a project can derail the long term goal of sustainability.
ORDER an A++ paper from our MASTERS and DOCTORATE WRITERS
Who We Are
We are a professional custom writing website. If you have searched for a question and bumped into our website just know you are in the right place to get help in your coursework.Do you handle any type of coursework?
Yes. We have posted over our previous orders to display our experience. Since we have done this question before, we can also do it for you. To make sure we do it perfectly, please fill out our Order Form. Filling the order form correctly will assist our team in referencing, specifications, and future communication.
Financial Risk Management Paper Is it hard to Place an Order?
ORDER NOW FOR AN ORIGINAL PAPER ASSIGNMENT
1. Click on the “Order Now” on the Main Menu and a new page will appear with an order form to be filled.
2. Fill in your paper’s requirements in the “PAPER INFORMATION” section and the system will calculate your order price/cost.
3. Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
4. Click “FINAL STEP” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
100% Reliable Site. Make this your Home of Academic Papers.
SCORE A+ WITH HELP FROM OUR PROFESSIONAL WRITERS: ORDER NOW FOR AN ORIGINAL PAPER ASSIGNMENT
Always Order High-Quality Academic Papers from HERE 5. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.
We will process your orders through multiple stages and checks to ensure that what we are delivering to you, in the end, is something that is precise as you envisioned it. All of our essay writing service products are 100% original, ensuring that there is no plagiarism in them. The sources are well-researched and cited so it is interesting. Our goal is to help as many students as possible with their assignments, i.e. our prices are affordable and services premium.
Looking for a Similar Assignment? Order a custom-written, plagiarism-free paper
