Page 167 - RISK Management IC 86
P. 167
The Insurance Times
Some examples of mixed measures are : replacement of
combustible materials with fire resistant building materials,
limiting stocks of explosives or other combustible
materials, training and education of employees regarding
hazards, etc.
Another classification of risk reduction measures is into
(a) education and training
(b) procedural devices and
(c) physical devices.
Q6. Examine the financial constraints in the following
methods of retaining risk internally :
(a) Charging of losses to operating costs.
(b) Contingency funds.
Ans.a) When charging losses against operating costs, an
organization need to absorb the additional expenditure
within a short time. Its ability to do so depend upon either
surplus of receipts over payments throughout the year,
or sufficient liquidity.
Therefore, the size of loss or an accumulation of losses
that be absorbed alongside other current expenses depend
upon the size of cash flow surplus / deficit plus liquid
reserves/short term borrowing.
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