Question

andrew owns a gun shop in a high-crime area. The store does not have a camera surveillance system. The high cost of burglary and theft insurance has substantially reduced his profits. A risk management consultant point out that several methods other than insurance can be used to handle the burglary and theft exposure. Identify and explain two noninsurance methods that could be used to deal with the burglary and theft exposure.

Answer 1

1. Transfer of risk by contract

2. Incorporation of a business firm

Step-by-step explanation:

1. Transfer of risk by contract

In this method, risk is transferred through an agreement. This ship owner, Andrew can have contract with the people that supply him guns in such a way that the risk is transferred to the suppliers or manufacturers.

2. Incorporation of a business firm

Andrew can reduce his risk through having creditors and also by borrowing debts. Through taking debts from others he is reducing his loss.