FIN 381

RISK MANAGEMENT AND INSURANCE


 


Prof. Arthur Gudikunst

Faculty Suite G Office

Campus Telephone 232-6387

Email: agudikun@bryant.edu

Course Description and Objectives:

Risks are confronted by both business firms and individuals on a day-to-day basis. These risks can be classified into: 1) pure risks, where there exists the possibility of either a loss occurring or no loss; and 2) speculative risks, where there can be the possibility of both loss and gain. The major focus of this course will deal with pure risks confronting businesses and individuals.

However, identifying a risk is only the first step in the process of risk management and control. When a risk is identified, the next step is to determine how to properly deal with that risk. The alternatives are numerous. We could decide to accept the financial consequences of the risk. We could decide to pool risks with others facing the same exposure. We could seek to purchase an insurance contract, which would compensate us if the risk outcome is a loss. In this case, we are paying a monetary premium to someone else to assume the risk of loss. But of course, the premium paid for someone else to assume the risk of loss must be priced appropriately, and the ability of that party to make the payments must be assessed. The other alternative may be to find ways to reduce or eliminate the risk exposure through direct action, although this may not always be possible.

The process of obtaining insurance from another party to accept our risk is only one method of dealing with the loss potential. If this alternative is available, then we need to understand how the risk is measured, how an appropriate premium payment is determined, and how a company offering to insure the risks faced by others must operate. The business of insurance, its operations, structure and legal environment is an integral part of the course.

The course will be approximately divided into three parts. The first part provides the basic framework for understanding risk, risk management, and the insurance device (including insurance providers, governmental regulation, and the financial aspects of insurance company operations). The second part will focus on life and health insurance, from both a business and individual basis. The third part will deal with property and liability risks, and the insurance products available to address these risks.

This course is a broad-based survey of risk and insurance for business and individuals.
 
 

Format for the Course:

Class meetings will comprise lectures and student-faculty discussions. Grading will be based on quizzes, examinations, case studies and other assignments from instructor.

Grading will be determined as follows:

Mid-term exams and quizzes 40%

Final Exam 20%

Cases and assignments 40%

Instructor Policies:

1. NO MAKE-UP EXAMS- exams and quizzes not taken in scheduled period will have the weight of missing work shifted to remaining graded assignments

2. LATE HOMEWORK ASSIGNMENTS- one letter grade deduction for each day after scheduled submission (actual days, not class meeting days)

3. PLAGEURIZED OR COPIED WORK- instructor reserves the right to award a grade of ZERO to any such submitted material, including examinations.

Required text:

Fundamentals of Risk and Insurance, 8th edition, by E.J. Vaughan and T. Vaughan

1999, John Wiley and Sons

other assigned readings as directed by instructor.

Course Outline:

Date Assigned Topic, Readings Assignment, Powerpoint Slides(hot link)
 
 
Week 1 Risk Concepts and the Insurance Device

Reading: text Chap. 1 and 2

 NOTES CH.1

NOTES Ch.2

Week 2 Nature of Risks and Management, Providers of

Insurance Products

Reading: text Chap. 3 and 4

NOTES CH.3

NOTES CH.4

Week 3 The Private Insurance Industry and its 

Governmental Regulation

Reading: text Chap 5 and 6

 NOTES CH.5

NOTES CH.6

Week 4 Insurance Operations and Financial Structure

Of Insurance Companies

Reading: text Chap. 7 and 8 

 NOTES CH.7

NOTES CH.8

Week 5 Principles of Life and Health Risks, and Social Insurance Programs

Reading: text Chap 10 and 11

 NOTES CH.10

NOTES CH.11

Week 6 The Actuarial Basis of Life Insurance and Forms of Basic Life Insurance Products

Reading: text Chap 13 and 12

 NOTES CH.12

NOTES CH.13


Week 7
Retirement, Annuities and Pension Plans: Forms and Risks

Reading: text Chap 18 and 19

 NOTES CH.18

NOTES CH.19

 
Week 8 Health Insurance: Disability, Income Protection and Payment for Medical Expenses

Reading: text Chap 20 and 21

 NOTES CH.20

NOTES CH.21

Week 9 Property and Liability Insurance-Homeowners and other Property Insurance

Reading : text Chap 24 and 26

 NOTES CH.24

NOTES CH.26

Week 10 Principles of Negligence and Legal Liability- Individual Insurance

Reading: text Chap 27 and 28

 NOTES CH.27 & 28
Week 11 Automobile Insurance and Personal Auto Policies

Reading: text Chap. 29 and 30

 NOTES CH.29

NOTES CH.30

Week 12 Liability and Property Insurance for Commercial Businesses

Reading: text Chap 31 and 32

 NOTES CH.31

NOTES CH.32

Week 13 Surety Bonds and Credit Insurance

Reading: text Chap 33

 NOTES CH.33
Week 14 The Future of Insurance

Guest Speakers and Presentations

Reading: text Chap 34

 
Exam Period **  Final Exam**