PES INSTITUTE OF TECHNOLOGY – BANGALORE SOUTH CAMPUS

Dept. of MBA
Lesson Plan
Semester – IV
Subject Code : 14MBAFM408 Total no of Lectures:
56
Subject Title : Risk Management & Insurance IA Marks:
50
Type : Elective Credits: 4
Faculty Name : Shweta Bhargav Exam Hours:
03
No of Lecture Hours / Week : 04 Exam Marks:
100
Practical Component Hour : 01 Ratio of theory to problems:
100 :0
Course Delivery
Every module, one session will be devoted to intensive teaching, one session will be devoted to case analysis by the extensive
participation by students themselves and the remaining sessions will be devoted to problem solving. In this respect, students are
expected to be prepared to discuss the cases and to participate actively in case analysis. In addition, students will be asked to hand in
exercises related to the thought material and brief case analyses before or after the case discussion takes place in class. Regular class
meetings will include a variety of teaching methods from lectures to case discussions:
− Lectures to present the theoretical framework;
− Exercises or problems as an expedite tool to visualise a specific issue in a quick manner. These pedagogical materials are
distributed in class at the moment it is required;
− Case studies for analyse and discuss more real and complex situations are distributed in advance, and must be read, and
studied before each class, which will be distributed by the instructor in the previous day of the class.
− If the topic demands; a Video will be shown to the students about 10 to 15 minutes and the instructor would hoist
questions to initiate the discussion relevant to the topic of the day
− An electronic version of lectures (slides) will also be available via email, as you usually wish so.

Course Objectives:
1. To provide an understanding of different types of risk.
2. To provide an understanding of the risk identification and measurement
3. To give an overview of role of Insurance in risk management.
4. To comprehend insurance contracts such as Life Insurance, general insurance and marine insurance.
5. To provide an understanding of the management of insurance companies
Course Outcomes:
At the end of the course, the students are able to:
1. Understand the process of identifying the risk.
2. Recognize the complexities involved in risk identification and measurement
3. Be acquainted with the function of Insurance in risk management.
4. Be aware of various types of insurance contracts.
5. Understand working of insurance companies.
 Table - 1
Session Plan
Module No

Cumulative Coverage
Evaluation Technique LearningStudent
Contents Pedagogical Presentation Assignments /
Tools additional work
Session No.

I 1-2 Introduction to Risk Management: Risk- DLP # Class Discussion

Risk and Uncertainty-Types of Risk-Burden & Refer the Refer the # Test I
of Chalk Board Table 2 Table 3 # Case Presentation
Risk-Sources of Risk-Methods of handling
Risk-Degree of Risk-Management of Risk
3-4 Risk Management-Risk Management
Process-Identification Loss exposures-
Analyzing Loss ” ” ” ”
exposures-Objectives of Risk Management-
Select the Appropriate Risk Management
Technique

5-7 Implement and Monitor the Risk Management DLP Refer the Refer the # Class Discussion
Program-Risk Management by & Table 2 Table 3 # Test I 18%
Individuals and Corporations Risk Chalk Board # Case Presentation
Management objectives-Need for a Rationale
for Risk
 8 Management in Organizations- Understanding
the cost of Risk-Individual Risk Management ” ” ” ”
and the Cost of Risk-Risk Management and
Societal Welfare.
II Risk Identification-Business Risk Exposures-
9-11 Individual Exposures-Exposures of Physical
Assets ” ” ” ”

Cumulative Coverage
Session No.
Module No

Evaluation Technique LearningStudent

Contents Pedagogical Presentation Assignments /
Tools additional
work

12-14 Exposures of Financial Assets -Exposures of DLP & Refer the Refer the # Class Discussion
Human Assets -Exposures to Legal Chalk Board Table 2 Table 3 # Test I
Liability - Exposure to Work-Related Injury- # Case Presentation
Basic concepts form probability and Statistics.
III 32%
15-19 Risk Measurement-Evaluating the Frequency ” ” ” ”
and Severity of Losses-Risk Control-Risk
Financing Techniques-Risk Management
Decision Methods-Pooling Arrangements and
Diversification of Risk
 20-21 Advanced Issues in Risk Management: The DLP & Refer the Refer the # Class Discussion
Changing Scope of Risk Management- Chalk Board Table 2 Table 3 # Test II
Insurance Market Dynamics # Case Presentation

22 Loss Forecasting-Financial Analysis in Risk ” ” ” ”

Management --
Decision Making-Other Risk Management
Tools
IV
23-24 Introduction to Insurance ” ” ” ”
Risk and Insurance- Definition and Basic
Characteristics of Insurance
Requirements of an
25-26 Insurable Risk-Adverse Selection and ” ” ” ”
Insurance-Insurance vs. Gambling Insurance
vs.
Hedging-Types of Insurance-Essentials of
Insurance Contracts.
Session No.
Module No

Cumulative Coverage
Evaluation Technique LearningStudent
Contents Pedagogical Presentation Assignments /
Tools additional
work
 27 Indian Insurance Industry -Historical ” ” ” ”
Framework of Insurance, Insurance sector
Reforms
in India-Liberalization of Insurance Markets-
Major players of Insurance.

28-30 Regulation of Insurance- Insurance Act DLP & Refer the Refer the # Class Discussion
1938- eligibility-Registration and Capital Chalk Board Table 2 Table 3 # Test II
requirement-Investment of assets-Approved # Case Presentation
investments-Licensing of insurance agents-
IRDA-Duties and powers of IRDA-IRDA Act
1999-IRDA regulations for general insurance
reinsurance, life insurance, micro insurance,
licensing of insurance agents, registration of
insurance companies and protection of
policyholders interest.

V
31-32 Life Insurance
Basics of Life Insurance-Growth of Actuarial ” ” ” ”
Science-Features of Life Insurance-Life
Insurance Contract-Life Insurance
Documents-Insurance Premium Calculations.

32-35 Life Insurance Classification-Classification ” ” ” ”

on the Basis –Duration-Premium Payment-
Participation in Profit-Number of Persons
Assured-Payment of Policy Amount-Money
Back
Policies-Unit Linked Plans
Annuities-Need of Annuity Contracts,
36-38 Annuity V/s Life Insurance, Classification of DLP & Refer the Refer the # Class Discussion
Annuities. Chalk Board Table 2 Table 3 # Test III
VI
39-40 General Insurance-Laws Related to General
Insurance-General Insurance Contract, ” ” ” ”
General
Insurance Corporation(GIC)-Performance
Private and Public General insurance
companies. 85%

41-43 Health Insurance-Individual Medical

Expense Insurance – Long Term Care ” ” ” ”
Coverage – Disability Income Insurance –
Medi-claim Policy – Group Medi-claim
Policy – Personal
Accident Policy – Child Welfare Policy-
Employee Group Insurance – Features of
Group
Health Insurance – Group Availability Plan.
44-45 Fire Insurance-Essentials of Fire Insurance DLP & Refer the Refer the # Class Discussion
Contracts, Types of Fire Insurance Policies, Chalk Board Table 2 Table 3 # Test III
Fire # Case Presentation
Insurance Coverage.

46-48 Marine Insurance-Types of Marine Insurance

– Marine Insurance principles Important
Clauses in Marine Insurance– Marine ” ” ” ”
Insurance Policies –Marine Risks-Clauses in
Marine
Policy.
Motor Vehicles Insurance-Need for Motor
Insurance, Types of Motor Insurance, Factors
to
be considered for Premium Fixing
VIII8 49-51 Management of Insurance Companies
Functions and Organization of Insurers-
Types of Insurance Organization, ” ” ” ”
Organizational
Structure of Insurance Companies-Functions
of Insurers.
Underwriting-Principles of Underwriting,
Underwriting in Life Insurance, Underwriting
in
non-life Insurance.
Claims Management-Claim Settlement in
General Insurance-Claim Settlement in Life
Insurance.

52-53
Insurance Pricing-Insurance Cost and Fair
Premiums, Expected Claim Costs, Investment ” ” ” ”
Income and the timing of claims Payments,
Administrative Costs, Profit Loading, Capital
Shocks and Underwriting Cycles, Price
Regulation.
Insurance Marketing: Marketing of
Insurance Products, Critical Success factors
for
Insurance Players, Marketing Strategies in
India.
54-60 Every fifth hour will be handled lab sessions which will focus the practical aspect
of the syllabus content. A complete revision through the presentation by
Lab Sessions
the students based on the presentation topics will be covered during this
slot.
 Table – 2
Presentation Topics
S.No. Mod. No. Presentation Topics
1-30 I to VII Case study and assignment topics will be considered as
presentation topics, Presentation only after T3
during review period.
Table – 3
Assignments & Additional Work
S.No. Mod. No. Assignment Topic
1 to 30 I to VII Each students will be given one question each from
Question Bank from the following manner ( 1 - 3
marks question, 1- 7 marks question and 1- 10
marks question)
Question Bank contents will be divided as an assignment topics to the students

Table – 4
Case Study S.No. Mod. No. Particulars
1 – 30 I – VII Case study will be given to the students for presentation
based on previous year question papers problems
and case let from text books
1 ” Question Paper, VTU, June-July 2011 & 12
2 ” Question Paper, VTU, June-July 2009 & 10
3 ” Question Paper, VTU, December 2008
4 ” Question Paper, VTU, July 2008
5 ” Question Paper, VTU, December 2006 / January 2007
6 ” Question Paper, VTU, July 2006
7 ” Question Paper, VTU, December 2005 / January 2006
8 ” Question Paper, VTU, January / February 2005
9 ” Question Paper, VTU, June / July 2004
10 ” Question Paper, VTU, January / February 2004
11 ” Question Paper, VTU, June / July 2003
12 ” Question Paper, VTU, January / February 2003
13 ” Question Paper, VTU, July / August 2002
 Table 5: Additional Readings and Recommended Books

1 Scott E. Harrington, Gregory R Niehaus, (2007), “Risk Management and Insurance”,

Second Edition, Tata McGraw Hill Publishing Company Limited, New Delhi.
2 Dorfman, Mark S., (2008), “Introduction to Risk Management and Insurance”, Ninth
Edition, Prentice Hall India, New Delhi.
3 George E Rejda, (2009), “Principles of Risk Management and Insurance”, Twelfth
Edition, Pearson, New Delhi.
4 P.K. Gupta, (2010), “Insurance and Risk Management”, First Edition, Himalaya
Publishing House, Mumbai
5 P. Periasamy, (2009), Principles and Practice of Insurance”, Second Edition,
Himalaya Publishing House, Mumbai
6 G. Kotreshwar, (2011), “Risk Management-Insurance and Derivatives”, First Edition,
Himalaya Publishing House, Mumbai.

Table – 6
IA Pattern
Test Marks Presentations Assignments
60% 20% 20%

 For Internal Evaluation T1 marks and the best out of remaining two will be considered.

 1st Test is mandatory.

 Question Bank
3 Marks Questions:
1. Explain the Risk of Exposure to legal liability.
2. What is meant by Exposure of Physical Assets?
3. Write note on Risk identification & Risk Evaluation.
4. Risk is incidental to life. Explain the various ways in which people may react to risk.
5. Mention four of the restrictions imposed on risks.
6. Explain how the type of cover available differs according to the period for which the insurance operates.

7. Indicate whether the following sentences are True of False, and correct the wrong sentences
(1) A risk manager is concerned with the control of his company’s insurance programme.
(2) Calling the insurer the treasurer of the insurer fund is not quite accurate because he is really the owner of the fund.
(3) Insurance helps to reduce the number or amount of losses by the system of rating and other means.
(4) The primary function of insurance may be said to be spreading financial losses over the insuring company.
(5) The final step in the risk management process is monitoring the results of risk management decisions.
(6) Viable insurance requires loses to be reasonably unexpected because it is impossible to insure any event, which is expected.
(7) Insurance depends upon the “law of large numbers” because small claims are not worth insuring.
(8) All risks cannot e insured commercially because the policy documents would be too complicated.
(9) The functional classification of insurance means that business is categorised by the subject matter insured.
(10) A statutory classification of insurance is to be supplied for statistical data supplied to government for control business.

7 Marks Questions:
1. What is pricing of insurance?Enumerate the distinguishing features of health and group insurance products.
2. Critically examine the risk analysis and risk control process of financial assets.
3. Discuss the difference between credit risk and market risk as applicable to financial markets.

4. Distinguish between pure risks and financial risks by providing examples.

10 Marks Questions:
1. Discuss each of the following types of traders in a derivatives market: hedgers, speculators and arbitrageurs.
2. What is meant by Credit Risk? Explain how to reduce exposure to credit risk?