Of
numbers and intuition That approach mirrors the one followed by the
Department of Risk Management and Insurance (RMI) at the Robinson
College. With an emphasis on enterprisewide risk management, the
program is training business leaders who can not only crunch the
numbers but also make sound decisions in uncertain circumstances.
That’s a departure from 10 years ago, when the program was dominated by
an insurance focus. “Back then, we offered five or six classes in risk
management, but they were all through the insurance lens,” says
Phillips.
Historically, risk management was a discipline that
was divvied up into silos, with insurance being one of them. Companies
employed insurance underwriters to protect against casualty risks,
finance officers to issue debt and manage variable interest rates to
hedge against f inancial risks, and CEOs to manage strategic risks such
as launching a new product or increasing product demand. But those
silos kept risk managers from capitalizing on the synergies that grow
when information is shared.
Then around a decade ago, the
field began evolving toward a portfolio, or enterprise, approach.
“Companies realized that it doesn’t really matter what causes the
shortfall in earnings,” says Phillips. “It’s all risk, and it all needs
to be managed.”
Rather than sit on the sidelines, RMI
Department leaders saw those changes coming and embraced them. They
developed a plan to bring the tools of quantitative methods such as
actuarial science and mathematical finance together with the insights
to be learned from disciplines of economics and corporate finance,
which focus on how information is shared and how individuals and
managers make decisions under the umbrella of a single unit. At a time
when other schools around the country were focused on traded risks
(e.g., financial securities that trade in capital markets), Robinson
decided to add value by honing in on the management and valuation of
nontraded assets. A second priority was to immerse students in
decision-making processes and ground them in strategic thinking.
Making
good on the plan To move in this new direction, over the past four
years the RMI Department has added 10 new faculty members. Like the
program itself, these faculty members are nimble and adaptable, easily
and regularly crossing disciplines. They include experts in dynamic
corporate finance, those well versed in asset pricing in illiquid
markets, others with strong quantitative finance skills, and even
scholars who are exploring the intersection of economics and law.
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