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Risk Management and Insurance

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Risk Management and Insurance


15 min read
10 take-aways
Audio & text

What's inside?

This textbook on insurance spots some new trends, like finite risk management programs and integrated risk portfolios.

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Editorial Rating



  • Comprehensive
  • Scientific
  • Overview


This textbook offers a detailed, panoptic view of the field of insurance and risk management. Author Etti G. Baranoff does not seem to promote a philosophical, narrative or analytical point of view on the subject. Instead, she aims to provide students with a dense introduction to the field’s bedrock information. Therefore, she presents a vast number of facts related to insurance and risk management, but generally refrains from taking a position on them. This is the sort of book one is assigned as the well-chosen, required text in a course on insurance. The author expertly defines every necessary term and explores every important aspect of the decision to buy or forego insurance, including legal implications, policy variants and alternative products. getAbstract suggests that corporate risk managers may want to keep it on their bookshelves for its excellent definitions and its appendices, which offer illustrative excerpts from several different insurance policies. Even those who are not in the risk management business could benefit from some chapters, especially those recommending ways to calculate the appropriate amount of insurance.


Risk and Insurance

Risk means uncertainty, the possibility that things will either go well or go badly. Risk comes in many different forms and some kind of insurance exists for each one. Health insurance covers the risk of sickness. Car insurance addresses the risk of auto accidents. Fire insurance covers the risk of fire. Unemployment insurance kicks in if you lose your job and liability insurance protects you if someone gets injured on your property and sues you. In most circumstances, the majority of people prefer to take no risks, or as few as possible.

Although people gamble, most agree that a sure thing is the most alluring bet. The better the odds of winning, and the lower the odds of losing, the more people like the wager. Insurance allows people to tilt the odds in their favor by removing all or part of the risk of loss. Insurance companies are professional risk takers. Their business consists of making astute bets on the frequency and severity of losses. In insurance jargon, frequency refers to the mean number of losses in a five year period, and severity refers to the cost of those losses. An insurance company calculates the odds of a person getting sick...

About the Author

Etti G. Baranoff is associate professor of insurance and finance at Virginia Commonwealth University in Richmond, Virginia. She is also the author of Core Concepts of Risk Management and Insurance.

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