THE ROLE OF INSURANCE COMPANY IN MANAGEMENT OF RISK IN MEDIUM SCALE ORGANIZATION (A Study of Usmer Water Ventures, Uyo)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF SUBJECT MATTER

Every purposeful and responsible enterprise quest is to improve and succeed in its prospection objective and for any business establishment to venture into achieving her goals and objectives must first and foremost take precautions in other to even though not to totally eradicate dangers and uncertainties that may subsequently come up will go a long way to limit it and its effects. It is at this point that a risk manager comes in to bring in ways in which risk could be managed in order to efficiently run and to achieve the organizational goals and objectives.

As we are in a business society one of the important thing most managers should have at the back of their mind is that there is no business enterprise that is free of risk, it certainly face some degree of risk, and some of the risk are controllable with respect to the appropriate taken against it whereas some are largely unpredictable. Before looking at the meaning of “risk management” it will be important to briefly examine the concept of risks. ISO 3100- International Organization for Standardization (2009) defined and summarized risk as the probability and/or impact of unfortunate events or the likelihood of loss. It went further to say that risks can be found anywhere from financial markets, project natural causes, securities, industrial processes, health, science experiments and so forth, therefore, risk ought to be managed  in  order to minimize the realization of unwanted opportunities.

Risk management is defined as a systematic process of identifying and assessing organization risks and taking actions to protect the firm against them (Encyclopedia of management) ISO 3100 (2009), want ahead to defined risk management as the identification, assessment and prioritization of risk followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities. Risk management is a functional management process or transfer mechanism of identification, evaluation earnings of a business or other enterprise with minimum cost and maximum efficiency.

In a paper presented by “Insurance Training Centre” Ogere Ogun state dated April, 1987 titled “scope of risk management extend beyond mere handling of insurance risk, it does encompasses, the management of all types of risk. Risk management is concerned with formulating some forms of defensive strategy, which takes account of organizational assets and objectives. This price of work will initially examined the various mechanism employed by Anchor Insurance company in the Assessment of risk. These include:

1. Process of identification
2. Evaluation
3. Monitoring and controlling of such risk

• The Identification of risk will include information on the proposal which reveals the physical and morale hazards of the subject matter of insurance.
• The evaluation of risk views placement of value on the identified risks, which threatens a corporate assets. The monitoring and control of risk highlights the physical and financial control of risk that threatens assets.

The centre piece of this work will be to thoroughly analyze various means of identifying corporate objectives. These will include retention, reduction and transfer of risk. Also, taking steps pre-loss and post loss objectives and the procedure for transfer and reduction of loss. The entire work of this piece will be comprehensively packaged by ascertaining various hazards and inherent liabilities present at the risk and make recommendations based on experts opinion to enable underwriter to decide whether the risk offered is acceptable at standard rate or otherwise. Finally, this work will also suggest ways and means for prudent risk management is respect with those risks that corporate bodies like anchor Insurance company as an entity is faced with and bring about reduction to loss exposure.

1.2     STATEMENT OF THE PROBLEM

The major problem of this research work is centered on how to reduce risk in Usmar Waters which will in turn enhance its development and also aids its management in successfully achieve their prospective objectives. Furthermore, the research work has communication shows as one of the most important aspect of the challenge. This is because it has to do with management as an efficient means of achieving corporate objectives of small and medium scale business and also the quest to achieving objective and maximizing risk is its most vocal point.

In addition to these challenges and constrains, lack of technical know-how could be said to be another major problems confronting Usmer Water. As an efficient means of achieving corporate objectives does not easily manifest or come  to lime light because basic insurance information sometimes does not reach most managers due to their lack of enterprise, and most managers due to their lack of expertise fail to go into research to source for information that will effectively aid the organization in taking a cover against these risk and uncertainties that might come up and pronounce the challenge faced in risk management in Usmer water and also the challenges of insurance practitioners (risk managers) in making Usmer water a better and improved company by providing ways and means of curbing risks in mentioned enterprise so as to improve its development and growth.

1.3     OBJECTIVE OF THE STUDY

1. To find out if there is risk management in Usmer Water.
2. To find out the challenges Usmer Water faced in risk management
3. To examine the contribution of insurance company in managing of risk in Usmer Water.
4. To find out the insurance plan in regards to Usmer Water
5. To ascertained if there is any damage as a result of lack of risk management.

1.4     RESEARCH QUESTION

For the purpose of this study, the following research questions have been proposed by the researcher.

1. Is there insurance management in Usmer Water?
2. What are the challenges faced in risk management in Usmer Water?
3. What are the contributions of this insurance company since the registration of Usmer Water company?
4. What are the insurance plans like in Usmer Water?

1.5     RESEARCH HYPOTHESIS

Ho:   There is no significant relationship between risk management and Usmer Water.

Ho:   There is no significant relationship between risk challenges and Usmer Water.

Ho:   There is no contribution between insurance company and Usmer Water.

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