Corporate Management of Highly Dynamic Risks: The Case of Terrorism Insurance in Germany

Christian Thomann, Razvan Pascalau (), J.-Matthias Graf von der Schulenburg and Bruno Gas

MPRA Paper from University Library of Munich, Germany

Abstract: This article extends the theory of corporate risk management to encompass highly dynamic risks. Taking Viscusi'�s (1989) prospective reference from the context of individual decision making and applying it to a corporate context we propose a theory of how corporations process new information. Using unique data on all terrorism insurance policies sold in Germany we find support for this concept of risk-updating by showing that the demand for terrorism insurance is strongly determined by the recent occurrence of terrorist attacks.

Keywords: Corporate Insurance; Risk Management; Terrorism Insurance; Expected Utility; Prospect Theory (search for similar items in EconPapers)
JEL-codes: D81 D83 G32 (search for similar items in EconPapers)
Date: 2007-12-13
New Economics Papers: this item is included in nep-ias, nep-rmg and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:7221

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