Risk Management and Insurance Perspectives in

Skipper & Kwon's Risk Management & Insurance: Perspectives in a Global Economy provides an in-depth understanding of international risk management and insurance, their dynamics, and the economic, social, political, and regulatory environments surrounding global risk and insurance markets. Incorporates an international perspective from the outset, filling the need to address risk issues on a global scale Follows theory with practice, analyzing real-world case studies, and exploring sound risk management and insurance operations in the future Includes discussion questions and exercise modules to help students understand the issues and apply their learning PowerPoint slides and updates are available online at http://facpub.stjohns.edu/~kwonw

Harold D. Skipper is former Chairman of the Department of Risk Management and Insurance at Georgia State University where he held the C.V. Starr Chair of International Insurance. He is past President of the American Risk and Insurance Association and Associate Editor of Risk Management & Insurance Review and Geneva Papers on Risk and Insurance. He has authored and edited numerous books, including Life & Health Insurance, 13e (with Kenneth Black, 2000) and International Risk & Insurance: An Environmental-Managerial Approach (1998).

W. Jean Kwon is Associate Professor of Insurance at the School of Risk Management, St. John’s University. He gained his experience from working in academia, the insurance industry and the government in the U.S. and abroad. He is past President of the Asia-Pacific Risk and Insurance Association and serves the Organization Committee of the World Risk and Insurance Economics Congress. He has authored several books, including Risk Management and Insurance in a Singapore Context (2000), and is on the editorial and advisory boards of several insurance journals and insurance institutions worldwide.

Preface	p. xii
Introduction	p. 1
Introduction to Risk Management and Insurance	p. 3
Introduction	p. 3
The Importance of an International Perspective	p. 4
Risk Management and Economic Growth	p. 6
The Language of Risk and Insurance Internationally	p. 8
The Environment for Risk and Insurance Internationally	p. 26
The Structure of this Book	p. 26
Discussion Questions	p. 27
Notes	p. 27
References	p. 27
Risk Perceptions and Reactions	p. 28
Introduction	p. 28
Individual Decision-Making Under Uncertainty	p. 23
Business Decision-Making Under Uncertainty	p. 40
Societal Decision-Making Under Uncertainty	p. 44
Conclusion	p. 52
Discussion Questions	p. 53
Notes	p. 53
References	p. 53
The Economics of International Trade	p. 55
The Economic Theory of Trade	p. 55
Fair Trade Concepts	p. 67
International Trade in Insurance: Economics and Policy	p. 68
Conclusion	p. 80
Discussion Questions	p. 81
Notes	p. 81
References	p. 82
Factors Shaping the Risk Environment Internationally	p. 83
Societal Risk Assessment and Control: Theory and Practice	p. 85
Introduction	p. 85
The Role of Government in Societal Risk Management	p. 85
Alternative Approaches to Societal Risk Management	p. 96
Understanding Societal Risk Perceptions and Decision-Making	p. 101
Conclusion: The Ultimate Risk Bearer	p. 107
Discussion Questions	p. 108
Notes	p. 108
References	p. 109
Catastrophe Risk Assessment: Natural Hazards	p. 110
Introduction	p. 110
Catastrophic Events: Definition and Trends	p. 110
Types of Natural Disasters	p. 113
Conclusion	p. 125
Discussion Questions	p. 125
Notes	p. 127
References	p. 127
Catastrophe Risk Assessment: Human Factors	p. 128
Introduction	p. 128
Terrorism	p. 128
Critical Infrastructure Risks	p. 134
Environmental Risks	p. 138
The Role of the Precautionary Principle	p. 150
Conclusion	p. 151
Discussion Questions	p. 151
Notes	p. 152
References	p. 152
Societal Risk Management and Changing Demographics	p. 153
Introduction	p. 153
The Demographic Transformation	p. 154
Implications for Fiscal Balance	p. 156
Economic Growth and Labor Market Challenges	p. 162
The Challenges to Financial Markets	p. 166
Implications for International Relations and Stability	p. 167
Conclusion	p. 172
Discussion Questions	p. 172
Notes	p. 172
References	p. 172
Regulation of Private-Sector Financial Services	p. 174
Introduction	p. 174
Private-Sector Financial Services	p. 174
Government's Role in Regulating Private-Sector Financial Services	p. 178
Overview of Financial Services Regulation	p. 181
Structure of Regulatory Authorities	p. 187
Governmental Actions Affecting Financial Services Regulation	p. 187
Conclusion and Future Prospects	p. 190
Discussion Questions	p. 191
Notes	p. 191
References	p. 192
Public-Sector Economic Security	p. 193
Introduction	p. 193
Why Private Markets Fail to Provide Some Financial Services	p. 193
Selected Public-Based Economic Security Services	p. 199
The Future of Social Insurance	p. 229
Discussion Questions	p. 231
Notes	p. 231
References	p. 232
The Legal Environment	p. 233
Introduction	p. 233
Major Legal Systems of the World	p. 233
Substantive and Procedural Law	p. 238
Tort Law Variations Internationally	p. 239
International Variations in Contract Law	p. 258
Choice of Law and Free Trade	p. 260
Discussion Questions	p. 260
Notes	p. 261
References	p. 261
Sociocultural Effects on Risk Management	p. 262
The Intersection of Culture and Risk Management	p. 262
Culture and Informal Risk Management Arrangements	p. 267
Microfinance	p. 278
Risk Perception Theories and Formal Insurance	p. 281
Conclusion	p. 283
Discussion Questions	p. 283
Notes	p. 284
References	p. 284
Enterprise Risk Management in a Global Economy	p. 285
Enterprise Risk Management	p. 287
Introduction	p. 287
The Evolution of Enterprise Risk Management	p. 288
Risk Management Fundamentals	p. 290
The ERM Framework	p. 293
The Risk Management Process	p. 294
Conclusions	p. 317
Discussion Questions	p. 317
Notes	p. 318
References	p. 318
Internal Loss Financing Arrangements	p. 319
Introduction	p. 319
Motivations for Internal Loss Financing	p. 320
Self-Insurance	p. 323
Captive Insurance Companies	p. 329
Other Art Techniques	p. 342
Conclusion	p. 343
Discussion Questions	p. 344
Notes	p. 344
References	p. 344
External Loss Financing Arrangements	p. 346
Introduction	p. 346
Risk Financing Through Derivatives	p. 346
Risk Financing Through Insurance	p. 358
Integrated Loss Financing Arrangements	p. 367
Conclusion	p. 368
Discussion Questions	p. 369
Notes	p. 370
Proof of Currency Relations	p. 370
Pricing Currency Options	p. 371
References	p. 372
Risk Management for Catastrophes	p. 373
Introduction	p. 373
Risk Analysis	p. 373
Risk Control	p. 381
Risk Financing	p. 390
Conclusion	p. 397
Discussion Questions	p. 397
Notes	p. 398
References	p. 398
Personnel Risk Management	p. 399
Employee Benefits	p. 399
Risk Management for International Employees	p. 418
Conclusion	p. 426
Discussion Questions	p. 427
Notes	p. 427
References	p. 427
Political Risk Management	p. 429
Introduction	p. 429
Modes of Foreign Market Entry	p. 429
Nature of Political Risk	p. 431
Risk Analysis	p. 433
Risk Control	p. 436
Financing the Political Risk Exposure	p. 438
The Importance of Monitoring	p. 446
Political Considerations in Emerging Markets	p. 446
Conclusion	p. 447
Discussion Questions	p. 447
Notes	p. 448
References	p. 448
Intellectual Property and Technology Risk Management	p. 449
Introduction	p. 449
Intellectual Property Risk	p. 449
Information Technology Risk	p. 456
Biotechnology Risk: The Human Genome Project	p. 465
Nanotechnology Risk	p. 470
Technology and the Environment	p. 473
Conclusion	p. 475
Discussion Questions	p. 475
Notes	p. 476
References	p. 476
Insurance in a Global Economy	p. 477
The Economic Foundations of Insurance	p. 479
Expected Utility and the Demand for Insurance	p. 479
Insurance Supply: Characteristics of Ideal Insurable Exposures	p. 489
Conclusion	p. 497
Discussion Questions	p. 497
Notes	p. 498
References	p. 499
The Nature and Importance of Insurance	p. 500
The Insurance Production Process	p. 500
Overview of Insurance Worldwide	p. 505
The International Dimensions of Insurance Supply	p. 512
The Role of Insurance in Economic Growth	p. 514
Determinants of Insurance Market Structure	p. 521
Conclusion	p. 526
Discussion Questions	p. 526
Notes	p. 527
References	p. 527
Life Insurance	p. 529
Introduction	p. 529
Policies Sold by Life Insurance Companies	p. 529
Selected Life Insurance Markets Internationally	p. 544
Conclusion	p. 564
Discussion Questions	p. 565
Notes	p. 566
References	p. 566
Nonlife Insurance	p. 567
Introduction	p. 567
Policies Sold by Nonlife Insurance Companies	p. 567
Selected Nonlife Insurance Markets Internationally	p. 576
Nonlife Insurance Issues	p. 593
Discussion Questions	p. 595
Notes	p. 595
References	p. 596
Reinsurance	p. 597
Introduction	p. 597
Worldwide Risk Sharing	p. 598
Reinsurance Demand	p. 599
Reinsurance Fundamentals and Operations	p. 600
Reinsurance Markets	p. 613
Reinsurance Regulation	p. 618
Conclusions	p. 619
Discussion Questions	p. 621
Notes	p. 621
References	p. 621
Regulation and Taxation in Insurance Markets	p. 623
Introduction	p. 623
Insurance Regulation	p. 623
Taxation in Insurance	p. 645
Conclusion	p. 653
Discussion Questions	p. 653
Notes	p. 654
References	p. 654
Financial Services Integration	p. 655
Introduction	p. 655
Meanings and Forms of Integration	p. 655
The Economics of Integration	p. 659
Management Issues in Integration	p. 662
Public Policy Concerns in Integration	p. 668
The Future of Financial Services Integration	p. 677
Discussion Questions	p. 678
Notes	p. 679
References	p. 679
Conclusions	p. 681
Risk Management and Insurance in a Global Economy: A Future Perspective	p. 683
Introduction	p. 683
Environments of the Future	p. 684
Risk Management in a Future Global Setting	p. 694
Insurance in a Future Global Setting	p. 696
Closing Observations	p. 699
Discussion Questions	p. 700
Notes	p. 701
References	p. 701
Glossary of Key Terms and Acronyms	p. 702
Index	p. 729
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Risk Management and Insurance Perspectives in a Global Economy

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