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Integration of Other Business Disciplines in an Organization

Risk management and insurance is a field that incorporates the expertise from all major business disciplines and, in turn, offers insight into how each can be integrated within a business organization.  In its best form, risk management and insurance views a business as a system and considers the interactions of all parts.

As previously mentioned, risk management and insurance and finance interact with one another in a number of important ways.  Risk management and insurance also has important interactions with marketing, personnel management, accounting, and production.

The interaction with finance is clearly evident in insurance markets, but it is also apparent in hedging, securitization, risk reduction, cost-benefit analysis, loss control, investment decision-making, and debt covenants.

With respect to marketing, risk management and insurance may be involved in managing such issues as false or misleading advertising, adequacy of product warnings, and product recall and rehabilitation.  In personnel management, risk management and insurance plays an important role in designing benefit plans, managing workers compensation costs, and providing accommodations for disabled workers, as well as guarding against unfair hiring practices and sexual harassment.

Examples of the connection with accounting include the evaluation of the adequacy of internal controls, the adequacy of disclosure, and the allocation of risk costs.  In the production field, the involvement of risk management and insurance extends to the areas of product safety and design, warranties, workplace safety, and environmental hazards.

Principles found in risk management and insurance can aid other disciplines in their management of these and other risks.  The field offers unique approaches to the management of fluctuations in outcomes, risk pooling, and decision making that not only enhance the effective operations of every business, but are also critical to business survival.  Despite the consideration of risk in other disciplines, no other course nor combination of courses will provide the theory or application of that theory that is available through a course specifically designed to address risk management in a unified framework.