CompetenciesConstruct a framework for identifying, evaluating, and categorizing risk and risk management tools.Appraise the relationship between a heightened regulatory environment and corporate governance.Evaluate the components of operational risk and the application of corresponding risk management plans.Evaluate the principles of risk and reward in the investment sector and its applications to the broader area of risk management.ScenarioLTD Acceptance is a private property and auto insurance carrier that specializes in sports cars and motorcycles. This organization is owned by LTD Capital, a large equity group with over 15 holdings. LTD Acceptance is the parent company's single largest holding as it drives 70% of total revenue. Due to the inherent risk involved in that segment of the market, many of LTD Acceptance's competitors do not offer policies for sports cars or motorcycles. This market segment is underserved which is why the organization has 20,000 active policies for a sports car or a motorcycle.LTD is headquartered in Houston, TX. LTD does not sell insurance directly to the public. Instead, it uses third-party agents to sell its policies. LTD handles all customer service needs including claims intake, policy services, and general questions. The company operates in four states: California, Texas, Louisiana, and Florida. Currently, LTD does not have an active system in place to ensure that its agents are in fact using LTD guidelines to screen potential policyholders. However, no evidence of negligence has emerged so far as the organization has yet to have a year in which it was not profitable. LTD has also had the good fortune of not suffering losses because of natural disasters or catastrophic events.InstructionsYou have been hired for the role of Senior Risk Analyst. This means that you are responsible for overseeing and managing the organization's all risk management activities. Before you can design a plan to manage risks, your first task is to identify the primary risk exposures the organization should acknowledge. The organization is also concerned about threats to its operational efficacy. Therefore, you need to also identify operational risk exposures and explain why operational losses must be categorized. The board is also seeking your input on the relationship between risk and reward and how it pertains to the company's investment portfolio. Your supervisor has asked you to create a PowerPoint presentation of your report. Remember your audience when crafting your presentation, and include the following slides:Title slideEvaluate the significance of identifying risks and address the ramifications of failing to do so.Identify two insurance regulations and analyze their roles in managing risks within the insurance industry.Identify the market, business, and compliance risks LTD encounters.Explain why the operational losses cannot be broadly managed. Why do they have to be categorized?Examine the relationship between risk and reward and how it pertains to investing.Explain why effective financial management correlates with risk management.Your conclusion slide should include at least three risk management activities relevant to insurance (and your rationale for choosing them specifically) and how they link to enhanced organizational effectiveness.