The success of any firm depends on its ability not only to create value for stockholders but also to protect such value. While the field of finance has historically paid significant attention to value creation, less has been said about the protection of value. Risk Management and Insurance (RMI) specifically addresses the issue of value protection. The Risk Management and Insurance curriculum focuses on the financial and economic characteristics of potential exposures to loss faced by firms and individuals, and the techniques available to minimize the costs associated with such exposures.
Increasingly, nonfinancial companies are recognizing the importance of enterprise-wide risk management and thus are turning to business schools for trained risk managers. There are also career opportunities in the various financial service industries such as insurance, banking, pensions, and investment management.
Required Courses
RMI majors are required to take to take a total of four courses in risk management and insurance. Three courses (RMI 3305 (Principles of Risk Management and Insurance), RMI 4320 (Fundamentals of Property and Liability Insurance), and RMI 4335 (Business Risk Management)) are required of all majors, and students may choose their fourth RMI elective (RMI 4310 (Fundamentals of Life and Health Insurance) or RMI 4330 (Employee Benefit Planning)). Here are some brief descriptions of the topics covered in each course:
RMI 3305 Principles of Risk Management and Insurance
An examination of the techniques for managing pure risks in order to maximize the value of a firm. The course contrasts the risk preferences of corporations with that of individuals, and explores the implications of differing preferences on insurance purchase decisions. The characteristics of insurance as a tool in the process of managing both corporate and personal risk exposures are emphasized.
RMI 4310 Fundamentals of Life and Health Insurance
A study of the financial implications of death, disability and retirement, as well as the corresponding forms of individual life insurance, health insurance and annuities. Elementary life and health insurance programming, taxation, legal aspects, business uses of individual life and health insurance, regulation, and insurer operations and functions are covered.
RMI 4320 Fundamentals of Property and Liability Insurance
A study of the property-liability insurance industry, including the economic and financial issues inherent in property-liability contracting. Specific topics include automobile insurance costs and prices, tort reform effects on insurance markets, economics of distribution systems, corporate governance and organizational form, financial pricing models, solvency measurement, solvency regulation and market discipline, reinsurance and catastrophic risk, underwriting and risk selection, rate making techniques, and underwriting cycles.
RMI 4330 Employee Benefit Planning
An examination of the rationale for, and basic details of, (1) employer provided group-life and group-health benefits, (2) private pension plans, and (3) government requirement required benefits, including social security, medicare and medicaid, disability income, and unemployment benefits. The approach focuses on the economic theory and historical developments of each of these areas.
This course covers the new and emerging field of integrated, or enterprise risk management. Specifically, it examines the use of insurance as well as various financial instruments to control the costs of corporate risk. Emphasis is placed on the identification, evaluation, and management of corporate risks. Besides examining traditional hedging strategies, techniques such as leveraging, post-loss financing, contingent financing, and diversification are also considered.
Course Sequencing
Other than taking RMI 3305 (Principles of Risk Management and Insurance) as the first course, there is no requirement that courses for a Risk Management and Insurance major must be taken in a specific sequence. The Department strongly recommends, however, that any student desiring to major in Risk Management and Insurance take FIN 3310 (Introduction to Financial Management) as soon as possible in their junior year. |
