Fall 2008 Version Professor Dan C. Jones FINA 4355 Class Discussion, Homework

Risk Management and Insurance: Perspectives in a Global Economy 26. Risk Management and Insurance in a Global Economy: A Future Perspective Professor Dan C. Jones FINA 4355 Class Discussion, Homework

3 We are leaving this chapter discussion with you.

Environments of the Future

5 The Economic Environment

6 The Financial Environment

7 The Political and Legal Environment The role of government Internationalization of the legal environment

8 The Regulatory and Tax Environments

9 The Sociocultural and Demographic Environments Risk perceptions Demographics

10 The Physical and Technological Environments

Risk Management in a Future Global Setting

12 Risk Management in a Future Global Setting

Insurance in a Future Global Setting

14 The Private Sector Trends in insurance demand Trends in insurance supply

15 The Public Sector

Discussion Questions

17 Discussion Question 1 Former Harvard University Professor Robert Reich liked to ask his students which they would prefer: (1) the U.S. economy growing at 2% and Japan at 3% or (2) both countries growing at 1%. A clear majority routinely chose the second option. If you are a U.S. citizen, which option would you prefer? Explain your rationale. (If you are not a U.S. citizen, substitute your home country for the U.S. and your country’s major trading rival for Japan, then answer the question.) Analyze the majority response of the Harvard students. Is it economically rational? Why or why not?

18 Discussion Question 2 Scientists examining a recently discovered meteorite believed to be from Mars concluded that it showed some elementary components necessary for life. Scientists also have, for the first time, discovered scores of planets orbiting other stars, and many believe that planets are more numerous than the stars. What economic, political, technological, religious and cultural effects do you believe that the discovery of intelligent life on other planets would have on us earthlings?

19 Discussion Question 3 About 75% of the world’s proven oil reserves are in the Middle East. Economic prosperity now and into the near future seems inextricably tied to an ample supply of oil. As the risk manager of a major MNC, what actions would you recommend taking to minimize any adverse effects of another oil shock on shareholder value? As the head of a major OECD country whose economy depends on Middle East oil, what actions would you recommend that your government take to minimize any adverse effects of another oil shock on your country’s economy?