IDS 573: Risk Management
Spring 2007, Call 24551, Wednesday 6:00-8:30 PM, room DH214
Yair M. Babad, UH 2403, Cell 310-431-6729, Fax 312-413-0385
e-mail: ybabad@uic.edu, URL: http://www.uic.edu/~ybabad
Office Hours Wednesday and Thursday, 5:00-6:00 PM
This class is sponsored by AON Risk Services of Illinois, Inc.
with John B. Sullivan, Sherril Kist, and Cyril Salibi as co-teachers
Updated: 4/9/2007
13:50:58
COURSE OBJECTIVE & PHILOSOPHY
Risk is a situation where there is uncertainty about the outcome that will occur during, and as a result of, current and future activities. This course provides a framework for thinking about the effects of risk, how is it measured, and how to manage risk and control its cost using insurance and financial instruments. The course will also present solvency requirements for insurance companies and financial institutions, such as reserves and risk-based capital, that are regulated to assure the long-term financial stability of these institutions. The course will also cover related policy issues, such as legal liability and economic security. These issues will be discussed both for individuals and corporate entities.
We are very fortunate to have this
class sponsored by AON Risk Services of Illinois, Inc. the largest insurance
and risk management broker in the
TEXTBOOK AND READING MATERIAL
The textbook for the class is Risk Management and Insurance, 2nd edition, by Scott E. Harrington and Gregory R. Niehaus, McGraw-Hill / Irwin, 2004, ISBN 0-07-233970-5 (H). Related texts are Integrated Risk Management: Techniques and Strategies for Managing Corporate Risk by Neil A. Doherty, McGraw-Hill, 2000, ISBN 0-07-135861-7 (D), and Applied Risk Analysis: Moving Beyond Uncertainty in Business by Johnathan Mun, Wiley, 2004, ISBN 0-471-47885-7 (M).
I do not expect to cover all the material scheduled for each class session in class. But I expect you to be aware of this material. To this end you have two sources: the text book chapters as denoted in the syllabus, and my PowerPoint presentations that cover this material.
We will not "read the text in class". Rather, certain issues will be emphasized, a discussion will be held, and your question will be answered and discussed. You must read on your own and be familiar IN ADVANCE OF EACH CLASS with the assigned material as given in the schedule and with the class material available in my web page, and be ready to participate in the class discussions.
My web page has PowerPoint presentations for all the material that I will introduce in class. These summarize the contents of the textbook, in addition to other material that will be discussed in class. You are advised to print these presentations (probably with 3 or 6 slides per page, framed, in black and white printing format) prior to class, so that you can use them in class in lieu of notes. You are responsible for knowing the contents of these transparencies as well as the textbook’s material (and of course whatever is discussed in class).
I believe that open
communications channels between all of us add significantly to the value of the
class. You are welcome to contact me – preferably via e-mail. In particular,
I maintain a web page for this class. To this end, get to my URL listed above, select this class, and you will find yourself in an "announcement file" for this course. This file includes references to related documents, such as this syllabus, homework, and PowerPoint presentation of class material, in addition to homework assignment and the latest announcements related to the class. The announcements in this file override the syllabus.
A common theme in my courses is the development of your communications skills and use of available computer technology and common software tools. You are expected to submit your work using word-processing and spreadsheet tools. Assignments should all be typed (using computerized office tools) and be professionally presentable; hand-written assignments will not be graded. Your work should follow the standards specified in the PRESHINT.DOC file in my web site.
All assignments, presentation and reports are due, unless otherwise specified, by the Monday mid-night before the class in which they are due; they should reach me, via TurnItIn (an anti-plagiarism system – instructions will be provided in the first class; class ID is 1767660, and the password is 24551 - the call number of the course), by this time. Assignment due-dates as given in the schedule or in class will be strictly adhered to and late assignments will not be accepted. Virus infected submissions will be deleted and not graded with no opportunity for resubmission. All assignments will have a filename in the format 573WkXLastNameMMDDYY.extension, where “MMDDYY” is the submission date, and “X” is the week related to the assignment (e.g., for presentations to be presented on week 3, X is 3; similarly, the reports summarizing week 3 presentation will also have X of 3).
COURSEWORK, QUIZZES AND EXAMS
I plan to invite business executives to certain classes, to present topics related to this class and share their experience with the students.
Students in the class will be divided into teams (of 2 students each). These teams will be mentored by AON personnel, with the goal of producing risk management analysis reports of real entities, based on publicly available information. Each team will produce two reports: An initial report of suspected risk factors affecting a major organization, and a more in-depth analysis of another major organization.
Each report will be prepared over a period of 4-5 weeks. At the end of this period it will be presented in class, will be presented to AON officers and employees, and possibly also to these organizations. The initial report will probably be 15-20 pages[1], and the in-depth report probably 25-30 pages. Each presentation will be 20-30 minutes. The reports and the presentations will be professionally organized and prepared using office technology, and are expected to follow the standards specified in the PRESHINT.DOC file on my web page. All reports should be submitted both on paper and electronically (to my email at ybabad@uic.edu
To assure that all the class members will benefits from the experience and learning of each of the teams, we will during the reports preparation periods discuss in each class the work of each of the teams. Each team will present a 5-10 minutes summary of its work, discussing its approach, the activities taken and the overcoming of hurdles (if any), and its conclusion. The class will then “brainstorm” these presentations and conclusions, to the benefit of all involved.
Following
each topic, each student will prepare each week a short summary (3-5 pages) of
the presentation and discussion of the topics presented or a related topic
(usually selected by the student, but may be given by me), to be submitted both
electronically via TurnItIn (as specified above). This report should follow the
standards specified in the PRESHINT.DOC file.
Note: For apparent reasons, no short summary will be required in the first weeks of the class.
All
of the aforementioned work will be available, through my web page, to all the
students in the class, so that you can learn also from what your friends wrote
and researched.
There
will be no exams in this course. Rather, each class session (except the first
one) may include a brief open book quiz, which stress understanding of the
required reading material and the material covered in the last class. This
system allows timely grade progress feedback, and motivates to prepare for each
session (and thus increase the probability of quality participation and getting
the most from the class sessions).
CLASS ATTENDANCE AND HONOR CODE
You are expected to attend all classes, and are responsible for all announcements made in class or in the announcement file. Makeup of quizzes or reports will be given only by approval PRIOR to the quiz or report, except for extreme circumstances. Punctuality is highly regarded; no student, if arriving late, will be given any extra time to complete a quiz, nor will makeup quizzes be offered.
The university's honor code will be adhered to. Cheating, copying, or plagiarism will result in an automatic failing grade for the problem, quiz, exam or project for all those participating in the cheating or copying, and may lead to a failing grade in the course for all those students who are deemed to have consciously contributed to the cheating.
GRADING
Grades will be based on each team weekly extensive report (30%), the team class presentation (10%), the weekly short summaries (30%), and on the quizzes (30% - equally weighted, and dropping the worst one, but not more than 5% per quiz.). Final grades will be assigned on a curve, and I will exercise my judgment as to the cut points, as well as to the grading of students who miss or come late to many of the classes.
Don't nitpick about the grading. Persons who complain will not be rewarded for it; those who have the decency not to complain would deserve the same break. A request to look at one problem leads to re-grading of the whole paper, which often leads to a lower grade.
No "extra credit" opportunities will be offered or assigned to specific individuals under any circumstances; all students' grades will be based on the same components - this is an equal opportunity course.
TENTATIVE &
APPROXIMATE COURSE SCHEDULE
This schedule is subjected to changes, either
because we will spend more time on a particular issue, or because we will have
a guest speaker. This schedule also does not reflect possible adjustment
resulting from participation by the AON co-teachers (that is known at the
update time of this syllabus as given in the header).
|
Class |
Date |
Class Subjects |
Topics |
Text |
|
1 |
17-Jan |
Introduction Guest speaker: Mr. Joe Wolke, Forsythe:
“Risk/Reward Model” |
Risk, its Objectives and Management |
1-2 |
|
Risk Identification and Measurement |
3 |
|||
|
2 |
24-Jan |
Foundations of Insurance |
Risk Pooling and Diversification |
4 |
|
Risk Aversion and Management by Entities |
9 |
|||
|
3 |
31-Jan |
Economic
and Legal Theory of Insurance AON: |
Economic Theory of Insurance and
Contracts |
10 |
|
Loss Control |
11 |
|||
|
|
|
|||
|
4 |
7-Feb |
Economic
and Legal Theory of Insurance (cont.) AON: The Initial Risk factors report |
|
|
|
5 |
14-Feb |
Insurance Ownership, Regulations |
Insurance Ownership and Regulations |
5-6 |
|
Legal Liability for Injuries |
12 |
|||
|
6 |
21-Feb |
Insurance Pricing |
Insurance Pricing |
8 |
|
Insolvency and its Regulation |
7 |
|||
|
7 |
28-Feb |
Risk-Based Capital |
Risk-Based Capital |
Class
Notes |
|
|
||||
|
8 |
7-Mar |
Guest speaker: Prof. Stanley Sclove,
UIC: “Decision Risk Analysis” |
|
|
|
9 |
14-Mar |
Guest speaker: Prof. Stanley Sclove,
UIC: “Decision Risk Analysis” – cont. |
|
|
|
10 |
21-Mar |
Intermediate
AON Class Presentation – First Company |
|
|
|
|
28-Mar |
*** No
class – Spring vacation *** |
|
|
|
11 |
4-Apr |
Personal Property Insurance |
Automobile Insurance |
13 |
|
Homeowner Insurance |
14 |
|||
|
Life Insurance, Annuities and Retirement Plans |
Life Insurance and Annuities |
15 |
||
|
Retirement Plans |
17 |
|||
|
12 |
11-Apr |
Employees Benefits |
Benefits and Medical Coverage |
16 |
|
Workers Compensation |
18 |
|||
|
Social Security |
19 |
|||
|
13 |
18-Apr |
Liability Management – Presented by AON |
Customers, Third Party and Shareholders
Liability |
28 |
|
Liability Risk Management |
29 |
|||
|
14 |
25-Apr |
Corporate and |
Analysis Tools |
26 |
|
|
27 |
|||
|
15 |
2-May |
Final
AON Class Presentation – Second Company |
|
|
|
|
|
*** CRIM
Exposition to the public and invited industry guests *** [required
attendance] |
|
|
[1] This assume the formatting standards specified in PRESHINT.DOC; in a single space, 10 point font, it is about 10-15 pages.