Preface | p. xii |
Part I Introduction | p. 1 |
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 |
2 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 |
3 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 |
Part II Factors Shaping the Risk Environment Internationally | p. 83 |
4 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 |
5 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 |
6 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 |
7 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 |
8 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 |
9 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 |
10 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 |
11 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 |
Part III Enterprise Risk Management in a Global Economy | p. 285 |
12 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 |
13 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 |
14 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 |
Appendix 14A Proof of Currency Relations | p. 370 |
Appendix 14B Pricing Currency Options | p. 371 |
References | p. 372 |
15 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 |
16 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 |
17 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 |
18 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 |
Part IV Insurance in a Global Economy | p. 477 |
19 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 |
20 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 |
21 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 |
22 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 |
23 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 |
24 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 |
25 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 |
Part V Conclusions | p. 681 |
26 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 |