Essentials of Risk Management

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Essentials of Risk Management, Third Edition, by George L. Head and Stephen Horn II (Insurance Institute of America, 1997)

Students should have great success with this two-volume set due to the many excellent design features that enhance the learning process. Each chapter begins with a set of clear educational objectives stated as specific; action oriented tasks students should be able to complete after studying the chapter. Next to the objectives are concise outlines of each chapter. The outlines provide a framework on which to build an understanding of the material, and provide a reference point for determining the breadth of coverage for each topic. The outlines are useful for seeing what is, and what isn't, covered. Significant sections within chapters begin with a small number of questions, prominently displayed in shaded boxes, specifying the issues to be addressed in that section. Exhibits are used liberally and with great effect. Many of the exhibits are taken from actual risk management situations, such as the risk management policy statements of General Mills and the State of Minnesota. Some of the exhibits would benefit from a sentence or two of explanation within the exhibits themselves, but overall, the exhibits help to illustrate important concepts and assist students' efforts to organize, integrate, and understand the material presented.

Cross-referencing and repetition are used extensively to tie together material from one chapter to the next, reinforcing the "essentials" of risk management in various contexts. In this regard, good use is made of a comprehensive case study, introduced in chapter one, and referred to and expanded upon throughout the text.

Despite occasionally erring on the side of too much redundancy to ensure that important points have been made, the writing style is straightforward and easy to follow. I did find the caveats relating to non-profit and governmental units in just about every chapter to be somewhat distracting, and I suggest the authors consider a separate chapter on such differences. The number of typographical errors disappointed me, several apparently resulting from the failure to track down all references to examples that were updated or changed from earlier editions. Most of the errors were minor, but could result in temporary confusion. Overall, however, Essentials of Risk Management is well designed to enhance student learning.

There is a definite emphasis on the "management" side of risk management. The scope of risk management, as a subset of strategic management, is clearly defined in the overview of risk management in chapter one. The managerial emphasis is then reinforced throughout the entire book as the risk management "process" is applied in several different areas. Although briefly mentioned in the first chapter, I believe a more extended discussion of the nature of risk itself, how it is being defined, and how it may be measured, both by insurance companies and other businesses, may provide a better background for later discussions of the appropriate use of insurance as part of an overall risk management program. …