Risk Management

Paper Summary:

This paper analyzes the theory development, underlying causes and consequences for the practice of risk management. The paper focuses on three periods; the early 20th century and the development of the insurance buyer concept, the 1950s to 1990s and the advance of the theory and practice of traditional risk management, and the period since the 1990s characterized by the development and implementation of the enterprise risk management (ERM) concept. The paper concludes with a brief analysis of the future of ERM as a holistic approach in the field of risk management.

Outline:
Abstract
Introduction
Early 20th Century: Development and Expansion of the Insurance Buyer Concept
1950s - 1990s: Theory and Practice of Traditional Risk Management
1990s-2008: Development and Implementation of ERM
Conclusion: The Future of Risk Management

From the Paper:

"A very basic form of managing risk was performed in manufacturing and engineering departments as early as 1920s (Marshall, 2007). At this time, the only major risk was damage to property, and it could be dealt with relatively easily via unsophisticated insurance. It was not until the Second World War (WWII) that the management sciences, including risk management, received significant attention. As Young & Tippins explain it, WWII was "required extraordinary efforts in logistics, material management, strategy and tactics, operations, and even applied statistics" (2002, p.4). As a result, American universities responded by expanding the studies of strategic management, operations management, logistics, and operations theory. Although the concept of risk management was not yet advanced into a separate field of study, interest in this area was increasing as demonstrated by schools offering courses in insurance, risk, and uncertainty. The emphasis was primarily on managing insurable risks by purchasing corresponding insurance coverage (p.5)."

Sample of Sources Used:

• Committee of Sponsoring Organizations of the Treadway Commission. (2004). Enterprise risk management - integrated framework. U.S.: COSO.
• Doherty, N. (2000). Integrated risk management: Techniques and strategies for managing corporate risk. U.S.: McGraw-Hill.
• Institute of Risk Management. (2002). A risk management standard. U.K.:AIRMIC, ALARM, IRM.
• Koller, G.R. (2007). Modern corporate risk management: A blueprint for positive change and effectiveness. Fort Lauderdale: J. Ross Publishing.
• Marshall, J. (2007). If ERM is so good, why isn't government using it. Risk Management, 54(10), 14-20.

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