Page 171 - RISK Management IC 86

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in valuation of potential property and liability
losses.

Ans. The problems faced by the risk manager in the
valuation of Potential Property and Liability Losses
are as follows:
The risk manager has to be concerned with estimating
the values that may be at risk when a loss occurs in the
future, and when their values would not be same as
current values.

The value of any asset that can be thought of in terms of
the loss or additional expenses that an organization has to
incur if deprived of the asset.

They can be measured by :
(i) Its replacement cost, or current purchase price (RC)
(ii) Its current resale value or net realizable value (NRV)
(iii) The net present value of its expected future earnings

(NPV)

Since one is concerned with future events, 'current' is
taken as 'the time of loss'.

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