Discuss at least two statistical tools that can be employed

Assignment Help Operation Management

Reference no: EM132057743

Competency

Examine the application of statistical functions and derivatives as instruments for measuring risks.

Instructions

You will assume the role of a senior analyst hired by a fictitious company, Premium Acceptance, a midsized property insurance carrier. Premium Acceptance is performing well with respect to several key performance indicators, including policies in force, policy retention, and new business counts.

One of your objectives as the newly appointed senior risk analyst is to develop a framework for managing loss ratios which is one of the firm's largest key performance indicators.

A loss ratio is simply the difference between the ratio of claims paid by an insurance carrier and the ratio of premiums paid.

The board of directors depends on the ability to forecast loss ratios, which in turn enables them to forecast profitability metrics to the shareholders. The organization will now consider implementing the use of statistics for measuring risks.

Your deliverable should be composed in a report. Be sure to address the following items:

Explain how statistics is used to formally define risk in the risk assessment process.

Discuss at least two statistical tools that can be employed to measure risk.

Convey which tool best serves the company's purposes and explain why it is.

What are the ramifications of the organization electing not to use statistics in this process?

Reference no: EM132057743

Questions Cloud

What should be the price of this common stock : JMB corporation has an issue of common stock. what should be the price of this common stock?

Calculate the stock expected return and standard deviation : If both possibilities are equally likely, calculate the stock's expected return and standard deviation.

Create a plan to develop as a leader and apply : This competency will allow you to create a plan to develop as a leader and apply this to your personal and/or professional life.

Calculate the conversion premium of the convertible bond : Determine the conversion ratio of the convertible bond. Calculate the conversion premium of the convertible bond.

Discuss at least two statistical tools that can be employed : A loss ratio is simply the difference between the ratio of claims paid by an insurance carrier and the ratio of premiums paid.

How much would bob need to save annually : how much would Bob need to save annually over the next 25 years assuming he earns 7% interest?

Differentiate yourself from the current market participants : The energy drink market is one that is crowded and competitive. Drinks with natural products already exist, how will you differentiate yourself.

Assuming barry ira continues earning : Assuming Barry's IRA continues earning 8% annually, what will Barry's IRA be worth at the end of 40 years?

What measures can banks employ to mitigate credit risks : Why do you think so many banks failed to properly manage risk prior to the financial collapse?

User Account

All Pages