The Future of Risk Management

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Howard Kunreuther, Robert J. Meyer, Erwann O. Michel-Kerjan
University of Pennsylvania Press, Jul 26, 2019 - Political Science - 416 pages

Whether man-made or naturally occurring, large-scale disasters can cause fatalities and injuries, devastate property and communities, savage the environment, impose significant financial burdens on individuals and firms, and test political leadership. Moreover, global challenges such as climate change and terrorism reveal the interdependent and interconnected nature of our current moment: what occurs in one nation or geographical region is likely to have effects across the globe. Our information age creates new and more integrated forms of communication that incur risks that are difficult to evaluate, let alone anticipate. All of this makes clear that innovative approaches to assessing and managing risk are urgently required.

When catastrophic risk management was in its inception thirty years ago, scientists and engineers would provide estimates of the probability of specific types of accidents and their potential consequences. Economists would then propose risk management policies based on those experts' estimates with little thought as to how this data would be used by interested parties. Today, however, the disciplines of finance, geography, history, insurance, marketing, political science, sociology, and the decision sciences combine scientific knowledge on risk assessment with a better appreciation for the importance of improving individual and collective decision-making processes.

The essays in this volume highlight past research, recent discoveries, and open questions written by leading thinkers in risk management and behavioral sciences. The Future of Risk Management provides scholars, businesses, civil servants, and the concerned public tools for making more informed decisions and developing long-term strategies for reducing future losses from potentially catastrophic events.

Contributors: Mona Ahmadiani, Joshua D. Baker, W. J. Wouter Botzen, Cary Coglianese, Gregory Colson, Jeffrey Czajkowski, Nate Dieckmann, Robin Dillon, Baruch Fischhoff, Jeffrey A. Friedman, Robin Gregory, Robert W. Klein, Carolyn Kousky, Howard Kunreuther, Craig E. Landry, Barbara Mellers, Robert J. Meyer, Erwann Michel-Kerjan, Robert Muir-Wood, Mark Pauly, Lisa Robinson, Adam Rose, Paul J. H. Schoemaker, Paul Slovic, Phil Tetlock, Daniel Västfjäll, W. Kip Viscusi, Elke U. Weber, Richard Zeckhauser.

 

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Contents

Introduction
1
BEHAVIORAL FACTORS INFLUENCING
11
RiskBased Thinking
48
Structured Empirical Analysis of Decisions Under
66
Mixing Rationality and Irrationality in Insurance
78
What We Do Not Learn from Experience
93
Using Models to Set a Baseline and Measure Progress
111
Learning from All Types of NearMisses
132
Efficient Warnings Not Wolf or Puppy Warnings
227
Threats to Insurability
251
The Role of Insurance in Risk Management for Natural
267
Improving Individual Flood Preparedness Through
286
Strong and WellEnforced Building Codes as an Effective
303
PublicPrivate Partnerships
325
The Regulation of Insurance Markets Subject
344
List of Contributors
381

Recent Advances
171
Improving Stakeholder Engagement for Upstream Risks
193
Improving the Accuracy of Geopolitical Risk Assessments
209

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About the author (2019)

Howard Kunreuther is the James G. Dinan Professor of Decision Sciences and Public Policy in the Operations, Information, and Decisions Department, and Co-Director of the Risk Management and Decision Processes Center at the Wharton School, University of Pennsylvania. He is coeditor of On Risk and Disaster: Lessons from Hurricane Katrina, also available from the University of Pennsylvania Press. Robert J. Meyer is the Frederick H. Ecker/MetLife Insurance Professor of Marketing and Co-Director of the Risk Management and Decision Processes Center at the Wharton School, University of Pennsylvania. Erwann O. Michel-Kerjan is a partner at McKinsey and Company. He was formally Executive Director of the Wharton Risk Center.

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