chapter 2 Flashcards
(31 cards)
What is the Three Lines of Defence Model in risk management?
First Line: Business units (e.g., underwriting & claims) manage day-to-day risks.
Second Line: Risk management & compliance functions oversee risk controls.
Third Line: Internal audit provides independent assurance.
Why is business planning important in insurance?
Aligns company goals with strategy
Helps in risk assessment & management
Ensures efficient resource allocation
Supports long-term financial stability
What is budgetary planning & control?
Setting financial targets for income & expenses
Monitoring actual vs. planned performance
Adjusting budgets to maintain profitability & financial health
What is the role of management information (MI) in insurance?
Provides data-driven insights for decision-making
Monitors business performance & risk exposure
Helps in regulatory reporting & compliance
What are the key factors influencing business performance monitoring?
Financial metrics (profitability, loss ratios)
Customer satisfaction & retention
Operational efficiency (claims processing times)
Compliance & regulatory adherence
A company wishes to improve communication across the business. What is the LEAST likely reason for this?
a.
A change in culture.
b.
Regulatory compliance.
c.
Engagement of staff.
d.
Improved efficiency.
b.
Regulatory compliance.
The purpose of a non-executive director within corporate governance is primarily to:
a.
provide an independent view on matters such as audit, management remuneration and risk management.
b.
lead the board of directors.
c.
work full time, managing part of the business on a day-to-day basis.
d.
provide an independent view specifically on regulation and financial matters, and be the organisation’s representative managing relations with shareholders.
a.
provide an independent view on matters such as audit, management remuneration and risk management.
Management actions are often regarded as consisting of four key elements. What are these?
a.
Organising; leading; controlling; finance.
b.
Planning; organising; leading; controlling.
c.
Controlling; finance; strategy; leading.
d.
Management; planning; organising; controlling.
b.
Planning; organising; leading; controlling.
Corporate culture can best be described as:
a.
the processes and procedures to meet regulations.
b.
the way we do things around here.
c.
the history of the business.
d.
what people do when you are watching
b.
the way we do things around here.
Corporate culture
Corporate culture refers to the shared values, beliefs, and behaviors that shape how employees interact and work within an organization.
The role of reviewing the management of debt, cash flow, liquidity and treasury matters within a business is most likely to belong to that of the:
a.
finance director.
b.
chief actuary.
c.
managing director.
d.
company secretary.
A.
What is the role of shareholders in a public company?
A: Shareholders appoint the Board of Directors and elect a chair from among them.
What is the main role of an executive director?
A: They work full-time in the company and manage parts of the business.
What is the role of non-executive directors?
A: They work part-time, provide independent views, and do not take on executive duties.
What expertise do non-executive directors bring?
A: They are chosen for their specific area of expertise and provide oversight on audit, remuneration, and risk.
Name three key responsibilities of a manager.
A: Hiring staff, training employees, and conducting performance evaluations.
What is the open door management style?
A: Managers are approachable by staff and encourage open communication.
What characterises the autocratic management style?
A: Control and decision-making rest with a single person, usually the chief executive.
Describe the paternalistic management style.
A: Management acts like a parent figure—caring for employees but possibly seen as over-controlling.
What is a militaristic/hierarchical management style?
A: Highly structured, formal, with clearly defined roles and chain of command.
What defines the democratic/consultative management style?
.
A: Decisions are made after consulting staff; encourages input from employees
What is the chaotic/laissez-faire style of management?
A: Managers act more like mentors, allowing staff to work independently and creatively.
What are the five main responsibilities of a Board?
Leadership – Provide direction and set strategic objectives.
Accountability – Ensure proper reporting and compliance with laws and regulations.
Oversight – Monitor performance and risk management.
Strategy – Approve and review strategic plans.
Appointments and Remuneration – Appoint senior management and set pay structures.
identify and explain the three key resources of a business:
Human Resources – The people who work for the business, including their skills, experience, and performance.
Financial Resources – The capital available for investment, day-to-day operations, and growth.
Physical Resources – Tangible assets like buildings, equipment, and technology.
