Case projects are valuable tools for teaching risk management and insurance (RMI). This article describes a flexible case study approach that can be used as a comprehensive capstone project for the RMI major or in modules for graduate and undergraduate RMI courses. The project incorporates both fundamental RMI concepts and emerging trends in the field. The use of the case project provides benefits to both students and the RMI program, especially given the increasing pressure for assessment in college curricula.
There are several challenges in teaching risk management and insurance. First, the field of risk management is rapidly changing and evolving. Advances in technology have created new and more powerful ways to model risk, and new sources of uncertainty continue to emerge. Some firms are now actively managing risk across the firm or "enterprise." Some individuals suggest that enterprise risk management reflects the future direction of risk management. Second, the commercial risk management process encompasses a broad spectrum of interrelated issues that are often difficult to understand in abstract terms. Finally, the appropriate risk management and insurance strategy is often dependent on the firm, industry, and current state of the economy. For this reason, a framework in which students can apply the concepts to a specific situation is critical.
A broad-based and detailed risk management case project can be an effective teaching tool that helps to address the challenges noted earlier. For the case study discussed in this article, students serve as risk management consultants for a fictional firm and they are expected to provide their "clients" with a comprehensive risk management audit. As such, the process includes all of the core risk management functions including identifying and valuing the firm's risks; recommending the appropriate risk treatments including retention, insurance and risk financing, and loss control; and suggesting a framework for risk management administration. The case project can serve as a capstone project for a risk management and insurance major, or components of the project can be used separately to reinforce a variety of risk management and insurance concepts and skills at the graduate and undergraduate level.
Each case contains a broad spectrum of risk management and insurance-related issues. The case companies represent a wide range of industries such as restaurants, retail firms, retirement communities, golf academies, and manufacturing firms. As such, the students can easily relate to and/or research the case firm's industry to learn about its industry-specific exposures.1 Each case includes a description of the ownership structure, operations, policies, personnel, property, financial statements, loss history, and copies of leases. In addition, a listing of insurance rates is included so that students can create estimated premiums for the recommended insurance coverages. Students also receive a series of Excel templates that serve a guide for many of the analytical portions of the case.
A CONTINUALLY EVOLVING PROJECT
A new case is developed each semester, and each case contains a combination of information based on the case firm's industry and emerging risks facing all firms. By creating a new case firm each semester, the project can be tailored to current issues in the field while still reinforcing fundamental risk management and insurance concepts. Each case also contains consistent elements that are included to reinforce the concepts learned in the risk management class, other insurance courses, and other business courses (e.g., accounting, finance). Topics include ownership succession, subrogation, regulatory requirements, employment practices, liability-related issues, as well as financial risk management topics such as currency exposure management. Although there are substantial developmental costs, the benefits of introducing a new case each semester are that it reduces the possibility of plagiarism from semester to semester and, more importantly, it also allows for the evolution of the risk management curriculum over time. …