ECON 439Risk Management and Insurance

Catalog

Prerequisites: Grades of C or better in ECON 360; also grade of C or better in college level statistics and calculus. This course provides students with a broad perspective of risk management that, while emphasizing traditional risk management and insurance, introduces other types of risk management providing a general framework used to manage all types of risk. Students will develop a conceptual framework decision tree for making risk management and insurance decisions with the goal of increasing individual welfare or business value. Economic analysis of the cost of risk and the benefits of risk reduction are covered for individual welfare and business value maximization. Economic theory of insurance supply and demand and the theory of risk aversion and utility are covered. Topics of interest include risk identification and measurement, insurance pooling arrangements, and diversification of risk, risk management through loss controls hedging, and derivative contracts. Auto, homeowner and life insurance policies are covered. Format: Lecture, weekly in-class quizzes, two in-class exams, two reports.