Swot Analysis in Micro Insurance product
Banc Assurance it. Use of CIT to drive business cost effectively
Emerging Insurance needs in the travel and healthcare sectors.
Enhance strategic alliances for business growth. Emerging middle class in Kenya and East African region.
Growth in acceptance of Micro Insurance products.
Conducive political environment.
Emerging in Insurance needs for the youth and Seems.
Growth in Insurance products – IPP, Individual life x.
External networks – AK’, KARA ; AIR
Increasing regulatory oversight.
Banc Assurance as an emerging competition.
Increase in fraudulent claims. Lb.
Increase in catastrophic events, climate change ; terrorism v.
Public perception on Insurance business. V’.
Growing inflation, unemployment & poverty rates. Vile.
Growing cost of business acquisition.
Safety/Security concerns, crime & impact on businesses.
Alternative investment opportunities with better returns.
The company should adopt the following strategies to overcome internal and external threats to the business:
(a) Improve risk management
(b) Comply with the Insurance Act and ARAB Act
(c) Put in place an effective credit control policy.
(d) Design and implement an investment policy in line with regulations and meeting shareholders expectations.
(e) Convert fixed assets into current/liquid assets that have higher return on investment.
F) Cut on management expenses
(g) Improve claims management
Question Two – Difference between uncertainties and project risks (5 Marks)
Uncertainty is the situation where there is a set of possible outcomes, but the probability of each one is not known.
Risk is the situation where there is a set of possible outcomes from the project and the probability of each is known.
The process of project risk analysis:
Identify the risks/threats
The first step in managing risks is to start by developing a risk profile I’.
Determine the probability This is the process of estimating the likely hood that the risk will occur. The goal is to annuity the uncertainty as much as possible although in reality we also use judgment. Iii. Assess the impact (severity) For each risk factor determine the potential impact the risk event would have on the project success factor if it qualifies. Given the probability of the risk and the impact it has on the project, the manager can determine which risk require more attention than others in terms of resource allocation time and management efforts. V.
Develop Responses Document a response plan for each risk using one of the five risk response options, which includes avoidance, acceptance, monitoring and evaluation, mitigation and earners.
V’. Get buy-in Review the risks response strategies with the key stakeholders to increase the awareness, get their feedback and get the acceptance of the planned project. Vile. Monitor and Control Don’t stop because risks are not static therefore you must continue monitoring to identify triggers that can cause risks or being mindful of new risk factors or looking at the new risk factors which were low but now they have become high. ) Five possible sources of project risk in Insurance Company
I. Compliance Risk KARA/AIR/AKA/CB compliance control it. Labor Unrest Strike, go slow etc
ii. Labor Turnover High labor turnover of key staff of the project
‘v. Changing customer habits while buying insurance services
v. Cut throat competition from competitors
v’. Threats of non renewal of license by the regulator – Insurance Regulatory Authority (AIR).
Project planning and selection are inseparable processes.
A. Differentiate between project planning and project selection (Omsk)
b. Outline criteria that project managers will use in selecting models. (masks) c. Discuss the numerical and and non-numerical project selection models. (masks a) Differentiate twine project planning and project selection (Omsk) Project planning is part of project management which relates to the use of schedules such as Giant chart to plan and subsequently report progress within the project environment. It states how to complete a project within a certain timeshare, usually with defined stages, and with designated resources. Project planning phase is so important for successful implementation and closure off project.
One view of project planning divides the activity into:
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* Setting objectives (these should be measurable)
* Identifying deliverables
* Planning the schedule
Making supporting plans In project planning, project scope is defined and the appropriate methods for completing the project are determined. Following this step, the duration for the various tasks necessary to complete the work are listed and grouped into a work breakdown structure. The logical dependences between tasks are defined using an necessary resources can be estimated and costs for each activity can be allocated to each resource, giving the total project cost.
At this stage, the project schedule may be optimized to achieve the appropriate balance between resource usage and project oration to comply with the project objectives. Once established and agreed, the project schedule becomes what is known as the baseline schedule. Progress will be measured against the baseline schedule throughout the life of the project. Project Selection is a process to assess each project idea and select the project with the highest priority. Project selection must align with the strategic goals of the organization, and it must help sustain the company’s core competencies.
Projects are still Just suggestions at this stage, so the selection is often made based on only brief descriptions of the project. As some projects will only be ideas, you may need to write a brief description of each project before conducting the selection process. Selection of projects is based on:
Benefits: A measure of the positive outcomes of the project. These are often described as “the reasons why you are undertaking the project”.
The types of benefits of eradication projects include:
* Social and cultural
* Fulfilling commitments made as part of national, regional or international plans and agreements.
A measure of the likelihood of the project being a success, I. E. Achieving its objectives. Projects vary greatly in complexity and risk. By considering feasibility when selecting projects it means the easiest projects with the greatest benefits are given priority. Note: A detailed review off project’s feasibility is conducted in the Feasibility Study Stage. Project Selection Stage will assist you by providing a process to compare the importance of the projects and select the most suitable project to undertake.
By following the Project Selection Stage you will follow a step by step objective method for proportioning projects – this can be used to explain o stakeholders the reasoning behind why you selected a particular project. The benefits of completing the Project Selection are:
* a transparent and documented record of why a particular project was selected
* a priority order for projects, that takes into account their importance and how achievable the project is
b) Outline criteria that project managers will use in selecting models.
Masks) Managers often use decision-aiding models to extract the relevant issues of a problem from the details in which the problem is embedded. Models represent the problem’s structure and can be useful in selecting and evaluating projects. It represents the decision area by structuring and formalizing the information we possess about the decision and, in doing so, presents reality in a simplified organized form. When project selection models are seen from this perspective it is clear that the need for them arises from the fact that it is impossible to consider the environment, within which a project will be implemented, in its entirety.
The challenge for a good project selection model is therefore clear. It must balance the need to simplify the situation sufficiently to make it possible to come to a conclusion in a reasonable length of time. In order to select a viable project, organizations use non-numeric models and numeric methods. Whichever models the project manager use, it needs to meet at least some basic criteria. The criteria of choosing a selection model is:
– I) Realism: The model chosen should reflect the reality of the managers’ deem and situation including the multiple objectives of both the firm and its managers.
Without a common measurement system, direct comparison of different projects is impossible. For example, Project A may strengthen a firm’s market share by extending its facilities, and Project B might improve its competitive position by threatening its technical staff. Other things being equal, which is better? The model should take into account the realities of the firm’s limitations on facilities, capital, personnel, and so forth. The model should also include factors that reflect project risks, including the technical risks of performance, cost, and time as well as the market risks of customer rejection and other implementation risks.
T) Capability: This model chosen should allow the manager to remain focused on the organization abilities and goals. It should also enable the manager to consider the likely risks benefits and costs. The model should be sophisticated enough to deal with multiple time periods, simulate various situations both internal and external to the project (for example, strikes, interest rate changes), and optimize the decision. An optimizing model will make the comparisons that management deems important, consider major risks and constraints on the projects, and then select the best overall project or set of projects.
Ii) Flexibility: The model should be able to accommodate changes within the environment. It should be self-adjusting and responsive to the changes in the projects environment with speed and accuracy for example, tax laws hang, new technological advancements alter risk levels, and, above all, the organization’s goals change. ‘v) Ease of use: It should also take a shorter time to execute. The model should be reasonably convenient, not take a long time to execute, and be easy to use and understand.
It should not require special interpretation, data that are difficult to acquire, excessive personnel, or unavailable equipment. The model’s variables should also relate one-to-one with those real-world parameters, the managers believe significant to the project. Finally, it should be easy to simulate the expected outcomes associated with investments in different project portfolios.
V) Cost: The cost of data gathering and modeling should be low, I. E. The cost of choosing the project should be reasonable in relation to the benefits of project selection.
All costs should be considered, including the costs of data management and of running the model.
V’) Ease of computerizing: It should be easy and convenient to gather and store the information in a computer database, and to manipulate data in the model through use of a widely available, standard computer package such as Excel, Lotus 1-2-3, Equator Pro, and like programs. The same ease and convenience should apply to transferring the information to any standard decision support system.
Discuss the numeric and non-numeric models of project selection (1 Omsk) There are two basic types of project selection models, numeric and non-numeric. Both are widely used. Many organizations use both at the same time, or they use models that are combinations of the two. Non-numeric models, as the name implies, do not use either objective or subjective. It is important to remember that the qualities of a project may be represented by numbers, and that subjective measures are not secretaries less useful or reliable than objective measures.
The model should first possess the above characteristics (discussed in question b) and should evaluate potential projects by the degree to which they will meet the firm’s objectives. To construct a selection/evaluation model, therefore, it is necessary to develop a list of the firm’s objectives. A list of objectives should be generated by the organization’s top management. It is a direct expression of organizational philosophy and policy. The list should go beyond the typical click©s about “survival” and “maximizing profits,” which are certainly real goals but are Just as certainly not the only goals of the firm.
Other objectives might include maintenance of share of specific markets, development of an improved image with specific clients or competitors, expansion into a new line of business, decrease in sensitivity to business cycles, maintenance of employment for specific categories of workers, and maintenance of system loading at or above some percent of capacity.
Non-Numeric Models These include the following:
I) The Sacred Cow In this case the project is suggested by a senior and powerful official in the organization. Often the project is initiated with a simple comment such as, “If you have chance, why don’t you look into .. ,” and there follows an undeveloped idea for a new product, for the development of a new market, for the design and adoption of a global database and information system, or for some other project requiring an investment of the firm’s resources. The immediate result of this bland statement is the creation of a “project” to investigate whatever the boss has suggested. The project is “sacred” in the sense that it will be maintained until successfully included, or until the boss, personally, recognizes the idea as a failure and it) The Operating Necessity terminates it.
They are those that are required to keep a system in operation e. G. Those projects that are meant to prevent catastrophe or those required to respond to emergencies. For example If a flood is threatening the plant, a project to build a protective dike does not require much formal evaluation,
If the project is required in order to keep the system operating, the primary question becomes:
Is the system worth saving at the estimated cost of the project?
If the answer is yes, project costs will be examined to make sure they are kept as low as is consistent with project success, but the project will be funded.
Ii) The Competitive Necessity These projects are conducted in order to maintain a competitive edge over other organization. E. G. In response to a competitors actions. They are considered to be of survival importance. And careful analysis may not be carried out. For example, many business schools are restructuring their undergraduate and Masters in Business Administration (MBA) programs to stay competitive with the more forward looking schools. In large part, this action is driven by declining numbers of tuition paying students and the need to develop stronger programs to attract them.
Investment in an operating necessity project takes precedence over a competitive necessity project, but both types of projects may bypass the more careful numeric of the firm.
‘v) The Product Line Extension In this case, a project to develop and distribute new products would be Judged on the degree to which it fits the firm’s existing product line, fills a gap, strengthens a weak link, or extends the line in a new, desirable direction. Sometimes careful ululations of profitability are not required.
Decision makers can act on their beliefs about what will be the likely impact on the total system performance if the new product is added to the line.
V) Comparative Benefit Model This is where projects is carried based on some criteria e. G. Where projects are ranked as good, fairer, poor), rank order or through peer review. For example, assume that an organization has many projects to consider, perhaps several dozen. Senior management would like to select a subset of the projects that would most benefit the firm, but the projects do not seem to be easily comparable.
Some projects concern attention new products, some concern changes in production methods, others concern computerizing of certain records, and still others cover a variety of subjects not easily categorized (e. G. , a proposal to create a daycare center for employees with small children). The organization has no formal method of selecting projects, but members of the selection committee think that some projects will benefit the firm more than others, even if they have no precise way to define or measure “benefit. Numeric Models I) Accounting Rate of Return (EAR) EAR is the ratio of average profits, after depreciation, to the capital invested. However, there are numerous variations and interpretations to this definition for the following reasons:
* Profits may be before or after tax.
* Capital invested may mean the initial capital investment or the average capital invested.
* Capital may or may not include working capital.
Calculation of EAR: Capital invested could be taken to mean either (a) Initial capital, or (b) Average capital Advantage:
* It is simple to calculate.
* Does not allow for timing of outflows and inflows. I. E. Projects may be ranked equally even if there are clear differences in timings;
* Uses as measure of return he concept of accounting profit. Profit has subjective element, is subject to accounting convention and is not as appropriate for investment appraisal purposes as the Cash flows generated by the project;
* There is no universally accepted method of calculating EAR.
It) Payback Period Method It is the time it takes an investment to generate sufficient returns to pay back the original investment in full.