Page 232 - RISK Management IC 86

Risk Management

and decision to insure on market value basis or replacement
value basis of finance function. Selection of standing
charges for purposes of loss of profits insurance is again a
finance function. To decide on the indemnity period, it may
be necessary to consult the production manager who can
advise on the likely duration of interruption of production
event of a fire or machinery breakdown.

Similarly, the materials manager may have to be
consulted as to the likely time that could be taken for,
say, procurement of raw materials, repair or replacement
of machinery etc. These factors affect the period of
interruption of production.

f sophisticated equipment has to be imported, obviously,
longer indemnity period have to be selected. The limits
of liability under public liability and products liability
policies may have to be fixed in consultation with the
legal department. The determination of amounts of
coverage under personal accident, sickness and medical
expenses is a personnel function.

Q4 . (a) Give example of transfer of risk by contract
conditions.

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