Page 162 - RISK Management IC 86

Risk Management

contractor/subcontractor always loads these kinds of
expenses in their contract prices and recover the costs.

Q4. Identify the differences between :

(a) Organisation Charts and Flow Charts - Organisation
charts are useful tools of risk identification which reveal
various facts about
(i) the nature and extent of the organisation's activity.
(ii) inter relationships and interdependencies between
various parts of the organization.
(iii) the breakdown of the organisation into individual profit
and cost centres which are to be considered while
taking risk financing decisions.
(iv) the people with the authority to participate in making
and implementing risk handling decisions.
(v) any organisational weaknesses which may enhance
risk situations.

Flowcharts show the flow of materials, parts, and
products from suppliers, through the various production
stages and on to customers.

By pinpointing potential bottlenecks, they reveal the
vulnerability of the business to risk, particularly when

Sashi Publications - www.sashipublications.com 163

Copyright@ The Insurance Times. 09883398055 / 09883380339