1. Doing: Risk Management Matrix

Using the basic risk management matrix, explain the following:

1. When would you buy insurance?
2. When would you avoid the risk?
3. When would you retain the risk?
4. When would you lose control?

2. Short Paper: Designing a Risk Management Policy

Design a brief risk management policy statement for a small child-care company. Remember to include the most important objectives. For the same child-care company, create a risk identification list and plot the risks on a risk map.

3. Doing: Financial Instruments

Refer to Chapter 5 to review if needed before completing this assignment.

1. What financial instrument might a jeweler use to cap his price for gold, the main raw material used in jewelry production?
2. If an insurance company invests in the stock market, what type of instrument would the insurer use to mitigate the risk of stock price fluctuations?