Making a Market for Acts of God: The Practice of Risk Trading in the Global Reinsurance Industry

Hardcover | April 19, 2015

byPaula Jarzabkowski, Rebecca Bednarek, Paul Spee

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Reinsurance is a financial market that trades in the risk of unpredictable and devastating disasters - such as Hurricane Katrina, the Tohoku earthquake and tsunami, and the terrorist attacks on the World Trade Centre. Such disasters are increasing in both frequency and severity, with the costof their losses mounting rapidly. Reinsurance insures insurance companies, enabling them to pay claims arising from these losses. It is thus a market mechanism that is a critical part of the social and economic safety net, helping to pick up the pieces after disasters. Yet, how is the risk of suchdisasters calculated and traded in a global market? This book brings to life the reinsurance market through vivid real-life tales that draw from an ethnographic, "fly-on-the-wall" study of the global reinsurance industry over three annual cycles. The authors shadowed underwriters around the world as they traded risks through multiple disasters. Forinstance, this book takes readers into the desperate hours of pricing Japanese risks during March 2011, while the devastating aftermath of the Tohoku earthquake is unfolding. To show how the market works, the book offers authentic tales gathered from observations of reinsurers in Bermuda, Lloyd's ofLondon, Continental Europe and SE Asia as they evaluate, price and compete for different risks as part of their everyday practice. Understanding how this market for disasters works has never been more critical given the impact of climate change and increased global connectivity, where a flood in one country can trigger losses to supply chains around the world. The authors develop a novel concept of how global markets work,which advances scholarship and challenges current thinking about how financial markets trade in intangible assets such as risk. This book will be useful to readers interested in markets for disasters, insurance, reinsurance and financial markets, and academics interested in the practice of financial markets specifically or the practice of strategy and organizations generally.

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From the Publisher

Reinsurance is a financial market that trades in the risk of unpredictable and devastating disasters - such as Hurricane Katrina, the Tohoku earthquake and tsunami, and the terrorist attacks on the World Trade Centre. Such disasters are increasing in both frequency and severity, with the costof their losses mounting rapidly. Reinsuranc...

Professor Paula Jarzabkowski is a Professor of Strategic Management at Cass Business School, City University London. Paula's research focuses on strategy-as-practice in complex contexts and market making in financial industries, particularly insurance and reinsurance. Her research has been foundational in the establishment of the field...

other books by Paula Jarzabkowski

Strategy as Practice: An Activity Based Approach
Strategy as Practice: An Activity Based Approach

Kobo ebook|Sep 9 2005

$59.69 online$77.43list price(save 22%)
Format:HardcoverDimensions:256 pages, 9.21 × 6.14 × 0.83 inPublished:April 19, 2015Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199664765

ISBN - 13:9780199664764

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Table of Contents

1. Reinsurance: A Market for Acts of God2. United We Stand, Divided We Fall: Bearing Risk Collectively3. Transforming Disasters into Tradable Deals4. Calculation at the Frontier: Evaluation in the Absence of Models5. One Firm's Trash is Another's Treasure: Competing in a Consensus Market6. Unraveling the Nest: From a Market for Acts of God to a Market for Commodities7. Addressing "Big Questions": Advancing a Practice Theory of the Market