SITUATION
Pansy Ellen Essman is a 48-year-old grandmother who is chairperson of a company that does $5 million in sales each year. Her company, Pansy Ellen Products, Inc., based in Atlanta, Georgia, grew out of a product idea that Essman had as she was bathing her squealing, squirming granddaughter in the bathroom tub. Her idea was to produce a sponge pillow that would cradle a child in the tub, thus freeing the caretaker's hands to clean the baby.

From this initial product, the company expanded its product line to include nursery lamps, baby food organizers, strollers, and hook-on baby seats. Essman has seemingly managed her product mix risk well. However, she is concerned that other sources of business risk may have been ignored or slighted.

Question 1 What types of business risk do you think Essman might have overlooked? Be specific.

Question 2 Would a risk-retention insurance program be a good possibility for this company? Why or why not?

Question 3 What kinds of insurance coverage should this type of company carry?