Mr. Green Tea hired you all as Risk Management consultants. For Part FOUR of the Group Project, as a team you made a recommendation to Mr. Green Tea management to implement one risk modification technique and one risk financing technique; that you all believe is critical for them to implement into their risk management strategy immediately.  Which step of the Risk Management Process were you all assisting Mr. Green with in Part FOUR of the Group Project? 

Mr. Green Tea’s new manufacturing facility is now operating at full capacity. A critical piece of equipment used in the operation is the massive walk-in freezer.  There is only one walk-in freezer in the production facility: which is used to store all of Mr. Green Tea’s finished ice cream inventory. The walk-in freezer faces the risk of the compressor failing or other mechanical issues; which in turn, would cause the freezer to lose its cold temperature. If this would occur, Mr. Green Tea would have to halt all production of ice cream as it would have nowhere to store its finished product. Additionally, it would have to relocate all of its finished product to another refrigerated facility very fast; or it would melt / be destroyed.  The risk of loss to this critical piece of machinery for Mr. Green Tea would fall under which quadrant of risk?

Mr. Green Tea utilizes its own delivery trucks to deliver its ice cream to customers. Mr. Green Tea owns five delivery trucks, and has five employees that drive these trucks to deliver finished product to customers. The customer’s order is unloaded at the customer’s location using a hand cart, and carried through their premises and into their kitchen / freezer area.  In the majority of situations, the delivery process goes smoothly. However, maybe two or three times per year, a driver will accidently damage the customer’s property while pushing the hand cart through their premises (something to the effect of = scraping a wall, damaging furniture, breaking glasses / plates on tables, etc.) These scenarios are simply accidents, since they only happen two or three times per year (very low frequency); and they usually only cost around $250-$500 to repair or replace the customer’s damaged property (very low severity).  Based on the Selection Matrix: given the characteristics mentioned above, which risk treatment option would be the best for this risk? 

***NOT a “real” question*** (points awarded as long as you answer)  How did you like the group project? Ultimately, this 15% of your grade in the class would either come from:  This group project  Another (second) Midterm Exam (covering Topics #5, 6A, 6B, 6C, and 7)    ***There is no “correct” answer… I just want your honest feedback! 

Mr. Green Tea has decided to purchase its new manufacturing facility in Keyport, NJ. This new facility is worth $1.2 million, and will be the key source of producing Mr. Green Tea’s line of products.  Rich and Michael have decided to purchase a property insurance policy on the manufacturing facility’s real property (the building itself); and all of the personal property within the building (machinery, equipment, inventory, etc.).  The property insurance policy that Mr. Green Tea purchased is providing Rich and Michael with all of the following benefits – EXCEPT:

Mr. Green Tea utilizes its own delivery trucks to deliver its ice cream to customers. Mr. Green Tea owns five delivery trucks, and has five employees that drive these trucks to deliver ice cream product to customers.   Since these trucks are on the road nearly every day completing deliveries, Rich is worried about the possibility of them being involved in an accident: The most likely outcome of a small “fender bender” type accident ($5,000 or less) is within Mr. Green Tea’s “risk tolerance.” However, although it is not very likely (very low frequency); a major accident that results in very significant (high severity) third-party property damage, bodily injury to another (third-party) driver, or maybe even the death of another (third-party) driver would be far above or outside of Mr. Green Tea’s risk tolerance.  Based on the Selection Matrix: given the characteristics of the risk mentioned above, which risk treatment option would be the best for this risk? 

One of the key ingredients used in the “green tea” flavor of Mr. Green Tea’s ice cream are green tea leaves sourced from China. Due to recent economic policies between the United States and China = new tariffs have been placed on imports from China. These tariffs have resulted in the price of Chinese green tea leaves increasing by 25% over the past several months.  The economic policy between the United States and China is a non-diversifiable, “Strategic – External” risk = that affects any firm operating in, trading with, or sourcing materials from China.  However, from solely the perspective of Mr. Green Tea, this increase in the cost of one of its key raw materials (green tea leaves) falls under which quadrant of risk? 

Mr. Green Tea has opened its new production facility in Keyport, NJ. Within the facility, workers are using various types of machinery and equipment during the production process; some of which pose the risk of causing serious injury to workers if they are not careful while using them.  In order to reduce the probability that a worker is injured by a piece of machinery or equipment: Rich requires every Mr. Green Tea employee to complete a comprehensive one-week long safety training program. The training program outlines how to properly use all of the machinery and equipment in the facility, and how to minimize the likelihood of injury while doing so.  This is an example of which type of risk treatment option? 

Mr. Green Tea utilizes its own delivery trucks to deliver its ice cream to customers. Mr. Green Tea owns five delivery trucks, and has five employees that drive these trucks to deliver product to customers.   Josh is a Mr. Green Tea employee, who is a driver of one of the delivery trucks. While out on his daily deliveries, Josh was texting his friend while driving. His distracted driving led him to inadvertently run a red light, crashing into another vehicle. Josh sustained no injuries and was completely fine. However, the accident caused significant damages to the third party driver (Alex). Alex’s vehicle was totaled (worth $30,000); and he suffered a broken arm. Alex was taken to the hospital where his treatment cost $15,000.  Who is legally liable for the costs associated with the other driver’s (Alex) car and his resulting injuries due to the accident? And more importantly, why? 

From the video, we learned the manufacturing facility Mr. Green Tea purchased in Keyport, NJ was damaged by Hurricane Sandy back in 2012. The high wind speeds of the storm damaged the roof and the windows of the building. This in turn allowed wind-driven rain / water to enter the facility; which caused water damage to the walls, floors, and all of the personal property located within the building. This resulted in over $600,000 of damages that needed to be repaired upon Mr. Green Tea’s purchase of the building.  The risk outlined above would fall under which quadrant of risk?