tailieunhanh - Lecture Risk management and insurance - Lecture No 1: Outline topics and risk in our society

In this chapter, the learning objectives are: This chapter’s objectives are to: Different definitions of risk, chance of loss, peril and hazard, classification of risk, major personal risks and commercial risks, burden of risk on society, techniques for Managing Risk. | Outline Topics and Risk in Our Society Lecture No. 1 1 Objectives Different Definitions of Risk Chance of Loss Peril and Hazard Classification of Risk Major Personal Risks and Commercial Risks Burden of Risk on Society Techniques for Managing Risk 2 Text Book Principles of Risk Management and Insurance, 12th Edition George Rejda Risk Management and Insurance, 12th edition, Trieschmann, Hoyt and Somer Text Books The Universal Principle of Risk Management: Pooling and Hedging of Risk Origins of concept of probability Multiplication rule, law of large numbers is basis of risk management Examples of risk pooling in operation Review of basic statistical and associated economic concepts: Expected utility theory, variance, covariance regression analysis Technology and Invention in Finance Financial institutions are inventions as much as engines are Once discovered, inventions copied around the world Relation to new information technology Evolving role of patent law Insurance: The Archetypal | Outline Topics and Risk in Our Society Lecture No. 1 1 Objectives Different Definitions of Risk Chance of Loss Peril and Hazard Classification of Risk Major Personal Risks and Commercial Risks Burden of Risk on Society Techniques for Managing Risk 2 Text Book Principles of Risk Management and Insurance, 12th Edition George Rejda Risk Management and Insurance, 12th edition, Trieschmann, Hoyt and Somer Text Books The Universal Principle of Risk Management: Pooling and Hedging of Risk Origins of concept of probability Multiplication rule, law of large numbers is basis of risk management Examples of risk pooling in operation Review of basic statistical and associated economic concepts: Expected utility theory, variance, covariance regression analysis Technology and Invention in Finance Financial institutions are inventions as much as engines are Once discovered, inventions copied around the world Relation to new information technology Evolving role of patent law Insurance: The Archetypal Risk Management Institution Private insurance institutions were invented after fire of London 1666 Role of discovery of probability theory in this invention The extension through time of insurance practice into increasingly more realms of human risk Modern insurance companies and their regulators Portfolio Diversification and Supporting Financial Institutions How risks are spread Covariance with market portfolio Beta Mutual fund theorem Investment companies and their management Efficient Markets and Excess Volatility Efficient Markets Hypothesis vs. Random walk Apparent inability of professionals to make money Warren Buffet and David Swensen: What does their experience prove? Behavioral Finance: The Role of Psychology Research in psychology Anomalies in finance Kahneman & Tversky: Prospect Theory Human Foibles, Manipulation and Regulation Louis Brandeis and insiders vs. outsiders Securities and Exchange Commission, 1934 The battle against fraud Regulation around the world Debt .