Business Risk of Hih Insurance Limited

Added on -2020-02-05

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Audit and Assurance
Table of ContentsAudit and Assurance............................................................................................................1INTRODUCTION...............................................................................................................3QUESTION 1.......................................................................................................................3a) Assessing the business risk of HIH insurance limited.................................................3b) Inherent risk factors that affect the financial report of HIH insurance company........4QUESTION 2.......................................................................................................................4Legal liability of HIH insurance company towards its clients and creditors...................4a) Factors that affect the partnership or cases in which partnership will be liable to itsclients and creditors.........................................................................................................4b) Condition of company if it is neglecting something....................................................5QUESTION 3.......................................................................................................................6a)More auditors are hire by HIH insurance company for its external audit team............6b) Advantages regarding both audit or consultancy services provided by one firm........6c) Whether there is violation of ethical standard is done in HIH insurance company.....7d) Impact on HIH insurance company of reforms proposed by Ramsay Report andCLERP 9..........................................................................................................................7CONCLUSION....................................................................................................................8REFERENCES....................................................................................................................9
INTRODUCTIONInsurance companies are those companies which provide compensation in lieu of anydamage loss or injury has taken place in exchange of premium payments. So this report isrelated to the one of the insurance company of Australia that is HIH insurance companywhich was established in 1995 with the merger of CE Heath and Swiss based insurer andin 1988 name of company was changed to HIH Insurance company from HIH Winterthur.HIH insurance company was the second largest insurance company in Australia beforethe collapse and the main reason behind the collapse of insurance company was it wasnot able to provide proper future claims to their clients and the company was facingregularly losses and due to some fraudulent activities done by the directors of thecompany. QUESTION 1a) Assessing the business risk of HIH insurance limitedAs risk are inevitable part of business more risk will lead to more profit in thebusiness. Risk means probability of occurring an event in future which may lead to greatloss as in the case with HIH insurance company they face huge losses and lead tocollapse. so it is very important to correctly evaluate the risk of business so that companycan take decisions regarding that risks. Business risk can be evaluated through manystrategies and by analyzing the past working of our business (Schmidt, Wood andGrabski, 2016). In HIH insurance company risk are related to insurance of marine aviation, naturaldisaster and film financing insurance, company can evaluate these risk by doing internaland external analysis of company and by knowing about the internal external factorswhich are affecting business directly, and have to make proper strategies regarding thefactors that affecting the business and try to minimize them (Meadley, Mrcog and Mrcog,2016). In HIH insurance company ,the main reason behind the liquidation was inability toprovide claims to their clients, if HIH has already assist this risk and had made properstrategies regarding the fund of claims or had made proper reserves for unforeseen losses

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