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The high road to education.

SCATTERED INITIATIVES over the last year or two suggest that the discipline of risk management is making modest advances toward academic acceptance among colleges with more traditional business management programs. In turn, while educational institutions may be slow in warming to the discipline, the private business sector is making its needs known and pumping millions of dollars into college programs for risk and insurance management.

About 18 months ago, a number of Chicago-area firms approached the Illinois State University with concerns over the lack of qualified college graduates in the areas of risk management and insurance. Working with the university to rectify the situation, the firms so far have financed about $1.3 million, with the school eyeing an unofficial goal of $5 million. The money is earmarked for a Center for Insurance and Financial Services, for endowing an insurance and risk management chair, and for providing operating capital.

Beyond the financing, the local insurance industry has set up an advisory board with the university, and several companies are developing internship positions for ISU students. Dr. Charles McGuire, chairperson of the newly renamed Department of Finance, Insurance and Law, credits the support of the private sector for this program, particularly at a time when he has "seen a lot of programs being cut around the country."

ISU always had a three-course risk management and insurance sequence within the finance specialization. Now there is a four-course sequence and plans for an eventual free-standing major. At the graduate level, ISU's College of Busilless is looking to create an insurance and risk management elective, with the long-term goal being an insurance and risk management concentration.

"The student reaction has so far been phenomenal," Dr. McGuire reports. ISU held its first ever "Career Day," attended by an estimated 200 students and 25 companies in the insurance-related industries, while students enrolled in the insurance sequence are competing for 12 new company-sponsored scholarships.

Historically, the discipline of risk management has been overlooked by the majority of institutions of higher learning. In his recent address at a Temple University awards luncheon honoring majors in risk management, insurance, and actuarial science, Saul P. Steinberg, chairman and CEO for Reliance Group Holdings Inc., remarked that fewer than 75 U.S. colleges and universities offer programs in insurance and risk management. And of those, less than half offer them as majors. He adds that "the rest still treat insurance education as an afterthought, tacked on to broad-based courses in finance and accounting. In so doing, they are shortchanging the students, as well as the companies who will hire them because the need for well-trained, highly skilled professional risk managers has never been more compelling."

Just this past year, efforts by RIMS and the American Risk and Insurance Association (ARIA) failed to get the backing of the American Assembly of Collegiate Schools of Business (AACSB) to require an entire course devoted to risk management and insurance or, at the least, weave the subject matter into a core course such as finance. The AACSB is the accrediting body for business programs in U.S. colleges and universities.

Ellen Thrower, president of the College of Insurance in New York, feels that business schools "are doing a real disservice by not teaching courses in risk management." She echoes Mr. Steinberg in believing that a school that does not require the teaching of risk management in some form has "not fully equipped its students for the business world."

In trying to reverse this trend, a commonality regarding the use of corporate funding is appearing-the establishment of department chairs. This is perhaps most important for the long-term growth of the risk management discipline because, in establishing chairs, both high merit and recognition are established also. "This phenomenon could prove to be a reversal of fortune. Chaffs recognize leadership that could trickle down to the fundamentals," noted Dr. M. Moshe Porat, chairman of Temple University's Department of Risk Management and Insurance. Moreover, when the funding comes from private sources outside the academic community, such chairs stand a greater chance of weathering any budget cutbacks or revenue shortfalls.

This past December in Canada, it was announced that Dr. Jerry L, Jorgensen would be appointed to lead a new program as the University of Calgary's new Chair in Insurance and Risk Management. The program, currently offered as a specialization within the Bachelor of Commerce program, began its inaugural course in January of this year with 36 students enrolled.

Among other things, Dr. Jorgensen is charged with the task of forging a relationship between the academic community and the insurance industry and organizing the insurance concentration with an eye "toward extending the program to the MBA and Ph.D. levels."

"We have found the insurance industry very supportive of our efforts, donating some C$850,000 so far to the program," Dr. Jorgensen said, and "they have been willing to help in any way that they can." He added that the Province of Alberta generously assisted with a two-thirds matching fund to bring the total endowment to about $2.5 million.

Michigan State University (MSU) presents an interesting contradiction. Roughly 18 months ago, Dr. Sam Cox was named to MSU's newly endowed A.J. Pasant Chairholder in Insurance position, where he is charged with promoting and teaching life insurance and financial services. The chair's endower had been the founder of Jackson National Life in nearby Lansing.

Ironically, this endowment came at a time when the insurance major at MSU was being dropped. Dr. Cox reports that "budget constraints will keep the school from expanding its offerings in this area anytime soon, although there has been considerable demand from the students for specific insurance courses" yielding a scant ray of hope for the program's resurrection.

Paul Danos, associate dean at the University of Michigan School of Business, said that his school is currently finishing up the funding for a chair in the area of risk management and insurance-the money arising from a "broad base of roughly 30 donors from the insurance industry and state and local governments." He notes that by having a continuing faculty member on staff in the form of the new chair, it will be easier to initiate more risk management course offenngs.

New developments in risk management education are not restricted to North America. The National Chengchi University in Taipei, Taiwan, for example, added a four-year undergraduate program in insurance in 1990, which now has an enrollment of 110 students. This is on top of the 65 students currently enrolled in the university's Graduate School of Insurance, established in ]-985. Dr. Vincent Sze, the graduate school's dean, notes that the administration has begun "searching internationally for faculty members in corporate risk management and insurance in order to meet the needs of the school's expansion." He adds "the strong support of the insurance industry" was vital for this expansion to occur, including establishing a chair in insurance and risk management.

Dr. Moshe reports that it costs from $1 million to $2 million to fully endow a department chair. Since this type of money is hard to come by, his department is looking to establish 'minichairs' where specific funds are allocated as a temporary stipend or subsidy to full-time teachers as a reward for high quality work. "This will enable our program to enhance its ability to recruit and retain quality faculty," he contends. In fact, it was the endowing of the Joseph E. Boettner Chair in Risk Management that helped give Temple's program an early push. Thus, an endowed chair holds the promise of being the bedrock of a risk and insurance management program, while elevating the discipline's status to that of its business school counterparts.
COPYRIGHT 1992 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:risk management in college curricula
Author:Kurland, Orin M.
Publication:Risk Management
Date:May 1, 1992
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