Risk Management and Insurance: Perspectives in a Global Economy by Harold D. Skipper, Harold D. Skipper, W. Jean Kwon, W. Jean Kwon

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