Iprm Problem Solution

IPRM PRoblem Solution

Running head: INTERNATIONAL PROPERTY RISK MANAGEMENT

Problem Solution: International Property Risk Management

Problem Solution: International Property Risk Management

International Property Risk Management is a major US insurer with a strong domestic portfolio. IPRM has seen a steady growth in the value of the properties it insures over the last twenty years. However, IPRM like the rest of the international insurance industry has seen its earnings affected by climate and weather. There have been major losses in some years due to increases in weather-related risks. As the rest of the industry, IPRM is alarmed by reports that suggest increasing risk of weather related property damage due to global warming, and feels the need for realignment of its North American portfolio for better risk management and for hedging its US risks exposure.

Situation Analysis

Issue and Opportunity Identification

IPRM has an urgent need for risk management planning before the start of the next Atlantic Hurricane season. Vice President Jack Breeze has suggested retaining the consultant April Shower to conduct another study for the company. Jack reported that April declined the consulting job offered to her by IPRM, but provided him with parts of her last report completed in 1998. Moreover, April agreed that, if IPRM will hire an independent consulting team, she and her team would review, comment, and audit the report and its recommendations. Jack presented an incomplete statistical report that was prepared in 1998 by April at the meeting. The report is based on secondary data taken from the Department of Commerce’s National Climate Data Center in Asheville, NC about U.S. weather disasters for the period 1980-1997.

Stakeholder Perspectives/Ethical Dilemmas

June Weathers:

IPRM North American VP for risk assessment. June has been with the company for 10 years in different risk management roles. She was promoted to the position of director of the risk management department two years ago, a position which has been converted to that of a VP four months ago. June feels that without immediate action IPRM will be caught woefully ill-prepared in another abnormally active season of natural disasters.

Jack Breeze:

IPRM VP in charge of property insurance revenue and claims. Jack has been with IPRM for 20 years, rising through the ranks from an adjuster position to his current position. Jack is very aware of the competitive pressures in setting premiums, as well as the time constraints on premium adjustments. Last year was the first year that property insurance operations have ended in a loss, since Jack became VP five years ago.

Tom Allen:

IPRM VP for new product development. Tom has a Ph.D. in finance and has been actively pursuing product diversification.

April Shower:

April is a consultant who had worked on contracts for IPRM in the past.. April has a Ph.D. in statistics and prepared a report on weather risk for IPRM several years ago.

Problem