Jack’s Home Appliance Center

Jack’s Home Appliance Center

It is nice to hear that Jack’s Home Appliance Center has increased profits from its start back in the 1950’s. However, he is setting himself up for some major losses by not taking into consideration certain risk exposures. Although, it is great that the store is located in a trendy and populated area, the exposure to the tributary of Salt Creek creates a risk for Jack. Floods do not occur frequently, but the damages a flood can cause are very high. The building is located only 125 feet from the water source and is accompanied by a cement path. If excessive rain were to hit the town, there would be no vegetation to absorb the moisture and most likely would come in contact with Jacks Home Appliance Center. The shop consists of expensive appliances that would all be exposed to the possibility of flood damage. Even though, the frequency is low, the severity is high and would greatly impact an appliance shop. Jack should be proactive about the situation and take precautions to minimize the risk.

Another risk exposure exists with the transportation of appliances. Jack manufacturers the appliances in America, Japan, and Mexico. Transporting the appliances back to the shop by only use of standard shipping is a concern. It is important that Jack protects against any possible damage to the appliances by transferring the risk to an insurer. He emphasizes the price of his products and therefore, damage to the products through transportation has the potential to add up over time. Not to mention, this risk exposure can create new problems, such as risks to the customers who eventually operate the damaged appliance. To avoid controversial settlements and loss in profits, Jack should consider getting inland marine insurance.

Overall, Jack’s Home Appliance Center has many red flags. His idea of a seamless purchase can expose himself to many risks. I assume he is not insured to handle others