Page 231 - RISK Management IC 86

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Q3. Discuss the role of functional management in the
following areas of risk management process :

Ans. (a) Identification of risk exposures - The accounting/
finance function is involved in the identification of assets
of the organization. These department maintains detailed
inventory and asset ledgers.

Identification of sources of hazard, for e.g, fire,
explosion, machinery breakdown, etc have to be done
by the production manager who has first-hand
knowledge of the nature of raw materials used, the
process of manufacture, type of plant and equipment
used, etc. legal liabilities may have to be identified by
the legal department.

(b) Determination of insurable amount - A decision
to transfer risk or to retain risk depends on several
factors like financials of the company, experience or
expertise, nature of business, reinsurance etc. The whole
purpose of insurance is to provide protection against
uncertain losses. So any method to find out the insurable
amount should be judiciously adopted.

Valuation of assets like buildings, plant and equipment, etc

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