M.B.A. DEGREE EXAMINATION, APRIL 2016
Fourth Semester
Banking and Insurance
RISK MANAGEMENT
(CBCS 2012 onwards)
Time 3 Hours Maximum 75 Marks
Part A 3 15)
Answer all the questions.
All questions carry equal marks.
1. Distinguish between risk and uncertainity.
2. How is market risk measured in banks?
3. What do you understand by bulls-s[reads?
4. State the sources of risks in banks.
5. What is risk avoidance? How is it done in banks?
Part B 10 50)
Answer all the questions by choosing either or
All questions carry equal marks.
6. Explain the various types of risks in business.
Or
Explain the need for risk management.
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7. How would you measure the market risks? Explain.
Or
State the importance of risk management in the
context of ALM.
8. State the differences between neutral and volatile
strategies.
Or
Explain the concept of 'counter-party credit risk'.
How could it be managed?
9. What is the common framework for potential risk
identification?
Or
What are the symptoms of direct and indirect losses
in risk evaluation?
10. Explain the concept of 'risk transfer' with a suitable
example.
Or
How would you differentiate risk reduction from
that of risk prevention?
Part C 10 10)
Compulsory.
11. Parul Agarwal received a brand new Maruti zen from her
husband on her Birthday. The car was insured against
damage or loss with wheels Insurance Company for an
amount of Rs. 5 lakhs with deductible of Rs. 75,000. One
day Parul who was an experience driver, took the car out
to visit her friend. On the way to her friends place, she
had to stop at a traffic signal.
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Although she stopped her car to avoid jumping the signal,
a speeding driver from behind rammed into her car. The
impact of the collision was such that Parul suffered
severe injuries and she had to be hospitalized. Her car
was reduced to a wreck.
Investigation revealed that the car that hit Parul's car
was being driven by one Ranjit Garg.
Parul filed a claim for loss with her Insurance Company
and received Rs. 4,25,000 as damage claim. The
Insurance Company inturn sued Ranjit on behalf of its
policy holder, Parul for the same amount that it had paid
her. Ranjit approached the court challenging the validity
of the Insurance Company's suit.
Questions
Explain the principle on the basis of which, the Insurance
Company accepted Parul's claim and later filed a suit
against Ranjit.