1. Name of the course: Risk Management and Insurance, Instructor: Dr. Tapen Sinha (tapen@gauss.rhon.itam.mx)

2. Objective of the course: To introduce to the students conceptual ideas that are fundamental to understand risk management and insurance from the point of view of a manager. In doing so, we will exploit concepts from economics, finance, accounting, management and statistics. However, background in any of these areas is not prerequisites for the course because we will develop the ideas used. Some proficiency in algebra and differential calculus is necessary.

3. Topics to be covered

  1. Risk management from a managerial point of view: Why should we study risk management?

    2. The basics of this section is set out in the following URL

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/rmi1/index.htm

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/rmi2/index.htm 

  2. An overview of Mexican insurance scene: Economic Aspects of insurance in the economy

    3. Banking in Mexico: A short history

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/banking/index.htm

     

    Financial development and insurance

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/growth/index.htm

    Insurance market in Mexico

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/insurance/index.htm

  3. Changing character of social insurance in Mexico: Development of IMSS, SAR and AFOREs

    4. Demographics and implications for insurance

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/population/index.htm

    Issues in the old system of social security (IMSS)

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/IMSS/index.htm

     

    Issues in AFORE: New Privatized Pension System

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/AFORE/index.htm

     

    Some Pension issues

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/retirement/index.htm

    Categories of retirement systems

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/pension/index.htm

  4. Insurance demand and supply basics

    5. Demand for insurance

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/demand/index.htm

    Supply of Insurance

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/supply/index.htm

  5. Insurance Markets: Corporations and risk management

Generic pricing models

http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/econ/index.htm
  1. Financial perspective of risk management

    2. http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/securit/index.htm

  2. Basics of options and futures

    3. Futures

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/futures/index.htm

    Peso futures

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/peso/index.htm

    Options

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/options/index.htm

    Pricing options by arbitrage

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/pricing/index.htm

  3. Cat Re options

    4. Catastrophic Reinsurance Options

    http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/CatRe/index.htm

  4. Use of surplus notes and capital notes
  5. Using capital asset pricing model for insurance pricing/cash flow issues

Capital Asset Pricing Model

http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/CAPM/index.htm

 

Cash flow issues

  1. http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/cashflow/index.htm
Textbook: The text for this course is Risk Management and Insurance by Williams, Smith and Young, McGraw Hill, Eighth Edition, 1998. But older editions will also be useful. The course will be geared towards two themes: Mexican insurance markets and recent developments in insurance markets. In either case, there is very little in the textbooks. So, there will be supplemental readings. I will use power-point slides in class. They are available in the following web site (http://gauss.rhon.itam.mx/~tapen/classnotes/RMI/). In addition, there will be supplementary course material.
  1. Course evaluation: There will be three examinations. Two will be held during the course (each with 25% weight) and a comprehensive (that is, it will cover the entire course) final exam (50%).
  2. The first exam will be on February 16, the second on March 23.