本篇assignment代写-HIH保险的批判性分析讲了HIH保险的业务风险比其他保险更可确定和可感知，主要是因为它的行为决定了它的命运。保险公司规模足够大，可以被紧紧地持有数年，并拥有大量的资金，用于投资于提供良好回报的不同系列工具。保险公司投资于股票市场、共同基金、债券市场、固定资产和实物资产。它成为了跨国公司的大股东，然而像HIH这样的公司却因为它所做的决定而导致了自己的灭亡。本篇assignment代写文章由澳洲第一论文 Assignment First辅导网整理，供大家参考阅读。
a) The business risk of HIH Insurance was more ascertainable and perceptible than others, largely because its actions determined its fate. Insurance firms are large enough to be held tightly for years and have a substantial treasury for investment purposes in different series of instruments offering good returns. Insurance firms invest in stock markets, mutual funds, debt markets, fixed assets, physical properties. It becomes large shareholders in multinational companies, and yet a firm like HIH led its own demise by the decisions it took. These decisions were largely self-interest driven. Each action and its subsequent results proved that the decisions were not serving even the smallest interest of the company.
The firm’s decision of withdrawing the prudential arrangement was a blunder that was clearly targeting subverting funds to a different non-organisational use, precisely to the owners and the directors. This decision was itself an indication that the business risk was predominant and easily unavoidable. When there was no purchase appraisal done for the FAI Insurance purchase, it diverted to a demise path, in which HIH insurance went ahead ignorantly. The resulting write off of $400 million investments in FAI was a clear indication that HIH is not heading in the right direction. The firm must have scrutinized the FAI purchase more than others because it was not a normal transaction, but was being sold by the HIH Insurance director himself, which was an uncommon arrangement.
Experiencing these actions and not learning from them, and repeating similar actions without any attempt of business sustainability were major factors seen as dangerous business risks for HIH Insurance.
b) Some of the risk factors that could have affected HIH Insurance are listed below:
1. The intentional deterrence from conducting a thorough appraisal analysis of FAI Insurance is a factor that calls immediate attention of the management and the investigators. This deterrence itself causes the risk to be amplified and suspicious because mergers and acquisitions and complete buyouts of companies require the most stringent appraisal activities to investigate the feasibility of the purchase.
2. Insuring clients in California when a sudden legislation change could convert the investment into risk was another factor that increased the risk probability.
3. Mr Williams overstatement of operating profits before abnormal items and income tax by $92.4 million was a risk factor at the financial reporting level, which increased the risk likelihood for HIH Insurance.
4. Mixing auditing with consulting rendered by a same entity is suspicious one, as the auditor is precisely to audit whether the performance is as per the legislation or the company has followed the legislative guidelines. Consultant is to enhance the growth potential by supporting new decisions of revenue streams and also to reduce the tax and cost component. These are contradictory when it comes under a single entity. This affects the financial reporting.
5. When the insurance firm is experiencing consistent loses from high-risk areas of film financing, natural disasters, California’s competitive workers’ compensation market, it must not have entered such risk prone areas. Especially, these areas must be avoided when the firm is unwilling to respond to immediate and difficult market changes and demands. This has affected the financial reporting level, which led to overstatement and underreporting of specific financial data hiding the true numbers.
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