- Physical damage to the 2000 Ford because of a collision with another motorist.
- Physical damage of a vehicle due to a collision with another vehicle can be defined as a property risk and, therefore, requires that a transfer should have been carried out to prevent the instance of a road collision. The choice of the risk management technique was predisposed by the fact that the frequency of such accidents is rather low, whereas the severity of the loss is quite high, including both financial and health-related ones.
- Liability lawsuit against Michael arising out of the negligent operation of his car.
- The risk of the opponent filing a case against Michael should be viewed as loss exposure, since the trial may possibly end up in the opponent winning the case and demanding that Michael should repay him. Seeing how the loss exposure does not necessarily mean that the loss actually occurs, it seems appropriate to choose the loss exposure as the one that does not necessarily result in losing money (Rejda 26). Reduction of anxiety can be viewed as a possible risk management technique.
- Total loss of clothes, television, stereo, and personal property because of a grease fire in the kitchen of his rented apartment.
- Seeing how the apartment has leaked in the past, as the background details say, it will be reasonable to suggest that Michael will be in what is legally defined as peril. While there are no clear indications of an accident being about to happen, the probability of the accident occurring is still much higher than it would be in an ordinary situation. To address the case in point, Michael will have to resort to the avoidance principle (Rejda 31). In other words, he should terminate his rent and return the keys to the apartment to its owner, meanwhile searching for another place to rent, or asking for a different (safer) apartment.
- Disappearance of one contact lens.
- The disappearance of one of the contact lenses is a subjective risk rather than any other type of risk since it depends on the mnemonic skills of the owner. Seeing how mnemonic skills often deteriorate in case of a mental disorder, it can be assumed that the concept of a subjective risk as the risk based on one’s mental condition can be related to it. With high probability and low severity, this issue demands that loss prevention and retention strategies should be utilized (Rejda 53).
- Waterbed leak that causes property damages to the apartment.
- A water leak, with a high-frequency occurrence and high probability rate, can be viewed as a property risk (Rejda 55). Belonging to another person, the property in question should be taken good care of; otherwise, a lawsuit may ensue. Hence, it will be required to use the principle of avoidance and either move to another room or hotel, or to inform the owner and wait until the leakage issue is fixed.
- Physical assault on Michael by gang members who are dealing with drugs in the park where he runs.
- Running into a bunch of street thugs, who are also into drug dealing, is quite improbable unless the area in question is defined as the one usurped by a local gang. Although it has not been specified where Michael rents his apartment, judging by the leakage mentioned above, Michael’s cottage is located somewhere in the suburban and rather dangerous place. Hence, the probability, as well as damage rates, is high. Consequently, it is crucial that the tenant should follow the principle of avoidance and retention (Rejda 53).
- Loss of tuition assistance from Michaels’s father who is killed by a drunk driver in an auto accident.
- The loss of tuition assistance, in this case, can be viewed as a low frequency and high severity loss. Hence, retention is the most reasonable choice for Michael’s risk management strategy (Rejda 15).
Works Cited
Rejda, George. Risk Management and Insurance (11th Ed.). Upper Saddle River, NJ: Prentice Hall. 2011. Print.