PowerPoint Slides for Professors Spring 2010 Version.
Spring 2010 Version
This file as well as all other PowerPoint files for the book, “Risk Management and Insurance: Perspectives in a Global Economy” authored by Skipper and Kwon and published by Blackwell (2007), has been created solely for classes where the book is used as a text. Use or reproduction of the file for any other purposes, known or to be known, is prohibited without prior written permission by the authors.
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W. Jean Kwon, Ph.D., CPCUSchool of Risk Management, St. John’s University101 Murray StreetNew York, NY 10007, USA
Phone: +1 (212) 277-5196E-mail: Kwonw@stjohns.edu
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Note on “Expropriation”
Depending on the country and jurisdiction, the property owner may receive some compensation but the amount is likely below the market value of the property.
1. America's Economic Crisis: Now for the Non-Recovery
2. Afghanistan: Can the U.S. Avoid a Quagmire?
3. Iran's Tumultuous Election and Its Aftermath
4. The Divisive Debate Over Health Care Reform
5. Massacre at Fort Hood: The New Face of Terrorism?
6. The Death of Michael Jackson
7. Pakistan: On the Verge of a Breakdown
8. Mexico's Bloody Drug War
9. H1N1: That's Swine Flu to You
10. The End of Sri Lanka's Cataclysmic Civil War
The cost of interference > the cost of letting the firm stay
Joint venture partner from outside the host country
Minimum use of host country nationals
Use and enforcement of intellectual property rights
Source equity/debt financing from within the host country
Minimize retained earnings locally
The correct name for the Arabian countries is “Inter-Arab Investment Guarantee Corporation.”
Private insurers are for profit while avoiding undue risk.
These providers are perceived as being more flexible.
Their coverages can be more expensive.
Traditional actuarial methods are less applicable.
They use portfolio management and diversification to assure spread of risks.
Source: CIA World Factbook(February 2010)
With increasing internationalization of national economies, would you expect political risk exposures to grow or diminish in importance? Justify your answer.
Could political risk exposures of MNCs might be hedged in the capital market? Speculate as to how this might be accomplished.
An entire national economy can be exposed to political risks in the sense that the actions of other governments can diminish its collective “value.” How should governments apply sound risk management principles to such exposures? Do government considerations in this respect differ fundamentally from those of firms?
Can governmental political risk exposures justify the creation, maintenance and protection of a domestically owned insurance industry? Justify your response.
We discussed two strategies for political risk management: an integrative strategy and a defensive strategy. Pick a country (or a political environment) for which an MNC might use an integrative strategy. Pick another country (or an environment) for which an MNC might use an integrative strategy. Support your choice for each with logical explanation. Would your choices of countries, tactics or both change depending on the nature of business?