4. Your company is a medium drug manufacturer establishedseveral years ago and is developing steadily. The board ofdirectors is planning a huge investment in a new drug’s R&D,which may need financial support from local banks. The governmentis considering increasing income tax rate for all drug industry inthe country. Since there has been little claim against yourinsurance company in the past three years, the board of directorssuggest that the policy need not be renewed when it expires by theend of this year. If you are the risk manager, what would be yoursuggestion and/or arguments regarding the risk financing plan foryour company?
