Chichilnisky, Graciela and Heal, Geoffrey (1998): Managing unknown risks: the future of global reinsurance. Published in: The Journal of Portfolio Management (1998): pp. 85-91.
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It has been said that insurance is the last of the financial services to accept radical change (Denney [1995-1996]). Yet there has been a fundamental shift in the geographic location and in the organization of the reinsurance industry in the last six years (Chichilnisky ). Global environmental risks are partly responsible for this change; increased weather volatility and catastrophic risks are difficult to diversify using traditional insurance practices. To provide a map to the future, we need a realistic appraisal of how we got where we are. This is the story of how humans have hedged risks. There are two basic and distinct approaches: statistical and economic. The former is typical of the insurance industry; the latter typifies the securities industry. Both are needed to manage today's catastrophic risks. Neither alone will do. We show how a combination of both leads to efficient outcomes, and is the way to the future (Chichilnisky [1996a, 1996b, 1996d]).
|Item Type:||MPRA Paper|
|Original Title:||Managing unknown risks: the future of global reinsurance|
|Keywords:||insurance; risk; global finance; environment; catastrophe bundles; climate change|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects
|Depositing User:||Graciela Chichilnisky|
|Date Deposited:||22. May 2008 03:35|
|Last Modified:||19. Jan 2015 21:43|
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