As Director of the Risk Management and Insurance Program at Baylor University, I have program responsibilities for this area.  At Baylor, courses in risk management and insurance are offered at undergraduate and graduate levels.   At the undergraduate level, risk management and insurance is offered as a major within the Department of Finance, Insurance and Real Estate.  At the graduate level, risk management and insurance courses are offered as electives for students enrolled in the Business School’s various masters degree programs.[1]

Prior to my appointment at Baylor, I received teaching awards and award nominations at other universities. As a graduate student at the University of Illinois, I was honored as the Outstanding Instructor in Finance. At the University of Texas at Austin, my academic department nominated me for two undergraduate teaching awards, and I received the UT-Austin Graduate Business Council's Award for Excellence in Teaching of the (MBA) Core Curriculum. Since coming to Baylor, I have consistently received favorable student evaluations that are as good as, if not better than, ratings accorded to my peers.[2] Students generally view me as an instructor who is interested in his subject and is well prepared and concerned that they learn the subject material. In 2002, I was honored as the recipient of the Lambda Chi Alpha Professor of the Year Award. In 2005, I received the Hankamer School of Business Distinguished Professor Award, which is given in recognition of excellence in teaching, research, and service.  In 2009, I received the American Risk and Insurance Association's Excellence in Teaching Award, which is given "in recognition of excellence in Teaching in the Risk Management and Insurance field."

My teaching is at the cutting edge of theory and practice in risk management and insurance, and is significantly informed by my scholarship in this field.  Furthermore, my pedagogical approach is oriented toward building deductive problem solving skills that are based upon principles of finance, economics and statistics.  Because my teaching experience has primarily been in the fields of risk management and insurance and finance, I will illustrate this approach to pedagogy by drawing upon examples in these fields. 

Although institutional arrangements are important in insurance markets as well as financial markets, such arrangements conform to a common set of fundamental economic principles that govern other markets as well.  Scholarship in the fields of risk management and insurance and finance has progressed by using economic, financial and statistical models to structure problems, and by using econometric techniques to test hypotheses.  Since risk management and insurance at Baylor is offered both as a major and as a finance elective course for finance majors and graduate students, this type of pedagogical approach is particularly appealing because students are able to draw upon a set of common principles in order to solve problems.  For example, portfolio theory (which is taught in our investments courses within the finance curriculum) can yield insights into the economics of risk pooling; information economics (which is taught in various economics courses within the economics curriculum) can be applied to the study of contract and organization design; and industrial organization (which is the subject matter for an entire course offered by the economics department) can be used to explain insurance market structure. 

In spite of all that risk management and insurance and finance have in common, only recently have serious attempts been made in scholarship and pedagogy to synthesize the two fields.  Such efforts are underway at business schools with leading risk management and insurance programs such as the University of Georgia, Georgia State University, the University of Illinois, the University of Wisconsin, and the Wharton School, as well as at Baylor University. [3]  This change in approach and philosophy has been motivated significantly by the convergence of insurance and financial markets, along with the ever-increasing frequency and severity of natural and man-made catastrophes.  Indeed, as noted in a recent Economist article, “The business of financing companies is converging with the business of insuring them.”[4]  Organizationally, business firms have responded to these trends by putting increased emphasis upon risk management as a core management competency, and in some cases establishing the position of “Chief Risk Officer.”  The Chief Risk Officer is typically a highly visible, top-level corporate executive who is responsible for ensuring that the firm understands and properly manages its key risks in an integrated and coherent fashion across the entire business enterprise.[5] 

My undergraduate Business Risk Management course (RMI/FIN 4335) and graduate Risk Management Seminar (RMI/FIN 5335) view risk management in an integrated fashion.[6]  These courses examine the use of insurance as well as derivative financial instruments such as options, forward contracts, and futures contracts to control the costs of corporate risk.  Careful attention is given to the incentives for mitigating corporate risks (e.g., through investments in safety and loss prevention) that are conveyed by the use of such instruments.  By enabling firms to transfer and pool risk more efficiently, insurance and derivatives often generate social as well as private benefits by facilitating the optimal allocation of scarce capital.  Unfortunately, such instruments can also generate social costs if they are not properly used.  A well-known unintended consequence of risk transfer is the “moral hazard” problem in which insured firms and individuals underinvest in safety and loss prevention.  Consequently, careful attention is also given to how the moral hazard problem is influenced by the design of managerial compensation contracts, corporate limited liability, regulation and the legal system.  More detail concerning how these courses are organized and structured is available online at http://fin4335.garven.com and http://fin5335.garven.com.[7]  These websites also illustrate another important aspect of pedagogy that I have pursued in recent years, namely, the effective integration into my teaching of information technology such as electronic mail and the World Wide Web.  These technologies have significantly enhanced my teaching effectiveness by enabling my students to access course-related materials such as lecture notes, readings and problem sets at their convenience.  They can also communicate with me by email and expect timely responses to their questions and concerns outside of class and regularly scheduled office hours.   

During my first three years at Baylor, I taught a required undergraduate course for RMI majors called Fundamentals of Property and Liability Insurance (RMI 4320).  This course provides a comprehensive study of the property-liability insurance industry as well as various economic and financial implications related to issues such as automobile insurance costs and prices, tort reform effects on insurance markets, insurance distribution systems, corporate governance, and organizational structure of insurance companies.  Careful attention is also given to the analysis and assessment of insurance pricing models, solvency measurement and regulation, reinsurance and catastrophic risk, underwriting and risk selection, and underwriting cycles.  Like the risk management course, the property-liability insurance course is rigorous and integrates important principles from finance, economics and statistics.[8]

Beginning with the Fall 2003 semester, I assumed responsibility for teaching Finance 4366, which is a course in financial engineering that focuses primarily upon financial risk management, the pricing of derivative securities, and the design of risk management strategies.  From a pedagogical standpoint, this course serves an important complementary role to the Business Risk Management course, and as a "capstone" course for students interested in investment management.

More recently, I have taught Managerial Economics in Baylor's Executive MBA program in Austin. I have also taught PhD courses at University of Queensland (July 2007; entitled "Current Issues in Risk Management and Insurance") and the Wharton School (Spring 2006; entitled "Markets for Risk Management").[9]


[1]More information concerning Baylor's RMI program can be obtained by visiting the program's website, located at http://www.baylor.edu/business/finance/index.php?id=24185

[2]Statistical profiles of teacher ratings are available upon request. 

[3]For a recent example of a scholarly attempt to synthesize these fields, see my paper with Richard D. MacMinn entitled "On Corporate Insurance,” Chapter 16 in Handbook of Insurance, Georges Dionne, editor (Norwell, MA: Kluwer Academic Publishers), ISBN: 0792378709, December 2000, pp. 541-564.

[4]See “The New Financiers,” The Economist, September 2, 1999.

[5]This type of integrated approach to risk management is commonly referred to by its practitioners as “enterprise risk management.”  See “Enterprise-wide risk management and the role of the chief risk officer,” by James Lam.

[6]In the undergraduate RMI curriculum, RMI/FIN 4335 is a required course.  However, finance majors can count it as a finance elective.  At the graduate level, RMI/FIN 5335 is an elective course.

[7]The username and password for secured links requiring authentication on this site are “guest” and “baylor” respectively.  

[8]Starting with the Fall 2003 semester, the responsibility for RMI 4320 has been put in the highly capable hands of Wes Bailey.

[9]The username and password for secured links requiring authentication on these sites are “guest” and “baylor” respectively.  

 

 
 

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