Pure Loss Exposure - Karl Printing Press - Essay Example

Pure Loss Exposure Karl Printing Press is a limited company established in Queens Borough, New York in Since its establishment it has emerged as a leading printing company that majorly specializes in photography, banner designs and development, ink cartridge supply as well as online marketing through blogs and social media platforms for small and medium enterprises. It has been able to cut a niche for itself in the competitive industry through shrewd business conduct and marketing strategies. But these have not made its risk averse; risks, which are both speculative and pure. Pure risk to them is that which only brings loss with no profit while speculative as the name suggests, is where there is both loss and gain being considered so it hangs in the balance (Peter, 44). Asset Exposure For a company like Karl printing press, various assets are at risk owing to pilferage, fire, destruction and even contamination. These assets include: 1). Office furniture like chairs and drawers. 2). Printers and computers both personal and mainframe computers 3). Motor vehicles 4). Stationery 5). Property like the building which can be exposed to destruction and also liability to the third parties whom the firm is legally responsible for. So when a fire destroys Karl Printing Press’s building, it destroys the printers and computers inside the office, its stationery and other properties that could be inside the building; this property loss is known as asset loss exposure. The theft of such properties results in similar exposure, which normally leaves the victims at a loss (Peter, 50). Personnel Exposure This kind of exposure is commonly called People’s loss exposure, which results from the death or injury of employees, third parties to whom the company is legally responsible for and volunteers. Retirements, incapacitation, death and even disability, which can be both physical and mental, result in substantive losses for the company. For example, the loss of an industrious employee to death or incapacitation leads to a lag in performance and the loss of time in finding a replacement. Personnel loss exposure include: 1). The Death of employees or third parties whom they are legally liable to. 2). Retirement of employees or third parties whom they are legally liable to; also, incapacitation as well as disability leads to this kind of loss. 3). Resignation on the part of employees and volunteers could also lead to this kind of loss since their exit would leave a gap in the company. Liability Exposure This kind of exposure normally attributes its origin to accidents. It is of no significance whether the accidents are intentional or really accidental, civil or criminal; their main intention is the establishment of settlements. Liability exposures include: 1). Employment practice liability; this occurs from civil suits due to unfair hearings, sexual harassment complaints from employees, amongst other prohibitive behaviors. 2). Product liability which arises due to health concerns ascribed to a product or patent rights dispute. 3). Workers’ compensation which arises from forced retrenchment and poor working conditions as deemed by workers. With all these civil and criminal suits, the loss is speculative since the likelihood of either winning or losing such cases hangs in the balance. Emerging issues like environmental protection and gender equality can also be fertile ground for disputes. Consequential exposures These are indirect losses which accompany insured loses like the loss that one encounters in case of pilferage and the burning of a building. They are not normally covered by insurance policies. They include: 1). Loss of customers when the building is destroyed. 2). Continued rent payments without the receipt income in case of property pilferage. B) I). How these Exposures are Currently Controlled Asset exposure Since the furniture, computers and printers are the physical assets of a business, their existence they p[lay an essential facilitator role for the business, taking various insurance policies against fire, intellectual property policy insurance, auto mobile insurance amongst others that may help in the eventuality of such risks breaking out is essential. The occupants of that building should also be trained on emergency precautions and evacuations, more so the Karl’s company staff members. This may help in the salvaging of crucial property in the company. Contracting of security services by the company should be prioritized. This is to eliminate cases of pilferage and ensure that in the binding contract, the firm contracted will be liable for any loss to the clients. The building from which the office operates should also be confirmed to be of viable operational standards by the relevant regulating authority; this is to avoid such risks of collapse as are currently prominent in the world (Services, 66). Though the organizations’ motor vehicles would have been secured for insurance that would not be enough. A comprehensive insurance that involves accident, pilferage and fire should be ideal. The cash, which sometimes copious during the high operational season should be insured when in transit but electronic money transfer would be ideal to avoid such cases of the robbery of high amounts of cash. Securing computer data and information would also be important through a backup system so that just in case of attacks by malicious programs like viruses, then they would still have all the important information for business operations. Buying antivirus for the computers would come in handy. Personnel Exposure Personnel exposures as we had defined earlier, are those risks that affect the employees, third parties whom the company is liable to and volunteers. They normally arise from injuries and death of these people. The death of an employee is a loss since the time it will take to replace such an individual will result to loss to the company. Disability, both mental and physical and retrenchment as well as retirement are all factors that lead to the losses. The losses are from time, to time, funds and compensatory factors. To avoid these eventualities, the company must make investments for its employees on medical insurance, workers’ compensation insurance; long-term care insurance, prescription drug plans and medical supplementary plan insurance. These are to enable the company stay afloat when such cases arise; unlike waiting for such eventualities then addressing them with current incomes (Peter, 69). This one can only bring disaster to the company by making it lose a lot of its income in the event of a large-scale exposure. Liability Exposure Liability exposure, which normally has the highest cases, should be dealt with caution. Right from the production of particular idea or brand, the company should be in contact with the patenting and copyright authority to avoid any legal suits against the company. In employing persons, a good interview and thorough professional conduct should be up held. This is done to avoid suits that might emerge owing to discrimination either on gender or race and the qualification of any of the candidates. The company, in establishing workers’ compensation insurance, should not use the insurance as leverage for the retrenchment of its workers. The company should establish a good working environment with minimal conflicts and a robust and motivated work force. This would help in the retention of employees in the long term and avoid civil and criminal suits that are a waste of time and resources. Environmental issues, which have emerged in recent times, should be considered in the organization’s modus operandi (Services, 80). This ought to be upheld right from the suppliers to the company so that the degradation of the surrounding is protected against and all stakeholders benefit. Civil and Criminal suits normally take up a large chunk of their revenues by minimizing them; they will avoid a considerable amount of losses. Consequential Loss Exposure They are indirect losses that are not included in the insurance policies, for instance an earthquake that destroys an office building. The company would continue paying the rent yet no income is received during this period. Consequential loss exposure is daunting since most of it occurs due to natural events, which are inevitable. The company needs to take the relevant insurance policies that can counter such losses when these incidences occur. They include the loss of income insurance, extra expense insurance, disability insurance, business interruption insurance and life insurance. This would help a great deal in the payment of employees’ salaries as well as other petty cash activities as the building is renovated or reconstructed. It can also help in the acquisition another office space. ii). How they are going to be financed Asset Exposure The financing of asset loss exposure come from the repatriated profits of the company, and company owner contributions in the initial stages of establishment. These sources, if managed well, will ensure the pooling of resources that are capable to sustain the company in the long run in case of any adversities. The management should also look on the insurance policies in the market and choose the best from these companies that adequately meet their concerns and needs. The use of profits to diversify their business can also come in handy. This is because; from such investments, additional income will arise that will enable the organization to meet its needs. Personnel Exposure Just like in asset loss exposure, the financing of this loss is no different. The use of initial capital will augment additional funds wherever they will invest, be it in real estate or other commercial ventures to enable them finance this loss as an added advantage. Collaboration with medical groups and other security pension groups will be good due to the professionalism it will stress and with professionalism comes benefits, which the company will enjoy. Liability Exposure Investing in legal experts through a healthy budget in the legal department, to ensure decisive action against the opponents could finance this. Like the other loss exposures the repatriation of profits and initial capital investments would be viable for financing the mitigation of liability exposure. Consequential exposure With its indirectness, the consequential exposure can only be pegged on the other losses sources of finance since they are highly interdependent. Another form of finance for this consequential exposure is the owner of the building or other person who are legally liable for the incumbent condition. C). The state of affairs is okay In life, as they say, one must risk to see his/her mobile movement. This movement can be either social or economic depending the path one follows. The case of Karl printing company is no different and they had to take an operational risk since their inception until now. This is why they have emerged as a force to reckon with in this competitive industry. Risks are a bit of the problems that companies face during their course of operations. Karl Printing Press, at any time, had it rough with their employees and experienced financial difficulties or mode of operations. These enabled them to take certain actions that were unpopular with their staff or customers or the immediate environment. Retrenching its employees, degrading of the environment by their associates, patent rights disagreements amongst others can bring about civil and criminal law suits, injuries can be sustained and even the death of its employees are bound to happen. An example is during the recent recession; retaining all its employees was not best for business. They had to retrench some so that the company could stay afloat. This decision rubbed some people the wrong way leading to civil suits. Since they had invested in worker retrenchment insurance as well as the legal sector, they had their way and adequately compensated the retrenched workers. In light of the assets, a natural calamity can wreck havoc, as in the case hurricanes and earthquakes that are extensively destructive. Insuring such properties as computers, furniture, and stationery is important for any organization to stay in business in the event they happen. The most complicated risk exposure is consequential loss exposure since it is indirect. It is pegged on any risk that happens, so it is normally hard to quantify (Peter, 92). To improve on the health and safety of this company, various issues have to be considered in the organization’s planning process. For example, the company must decide on what kind of insurance policies it should give its employees. Secondly, the level of preparedness it has in place in the event of an emergency like natural catastrophes like earthquakes and accidents occurs. In cases of accidents involving motor vehicles, the level of comprehensive insurance it offers like third party policies and the like is essential. The safety requirement that these buildings have in cases of emergencies must be considered. Disability insurance, workers’ compensation insurance, medical insurance and other forms of insurance must be taken into account for the survival of the company in terms of averting losses. This is because; without such policies and the company insisting on compensation from its current accounts, the possibility of accruing copious losses is high. These policies are designed as shock absorbers of business risks, which enable the business to stay afloat even with those problems. The company must also live to know that ‘prevention is better than cure’ so instead of only investing in such policies, they should also try to prevent the occurrence of events like law suits that may usurp their investments. Works Cited Bush Jonathan, Baker Stephen. Where Does It Hurt?:An Enterpreneur Guide To Fixing Health Care. Portfolio Hardcover, 2o14. Levitt D. Steven, DubnerJ.Stephen. Super Freakonomics:Global Cooling,Patriotic Prostitutes And Why Suicide Bombers Should Buy Life Insurance. William Morrow Paperbucks, 2011. Patricia, Garry. Medicare For Dummies. For Dummies, 2013. Peter, Bernstein L. Against The Gods:The Remarkable Story Of Risks. Wiley Publishers, 1998. Services, Bisys Educational. Property And Casualty Insurance License Exam Cram. Pearson It Certification, 2006. Read More