Measuring the Value of an Exposure: A Capital Budgeting Approach
AbstractThis paper presents an alternative method for evaluating property exposures, which is one part of the risk management process. The underlying premise is that the value of a property exposure depends upon the incremental cash flows lost due to a property loss and upon the firm’s cost of capital; therefore, evaluating exposure should be carried out in a capital budgeting framework. Comparative analyses indicate that the exposure values produced by this method are often lower than those generated by other methods, which could in turn lead to lower insurance costs. Use of this method is both theoretically justified and consistent with a managerial focus on enhancing firm value.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.
Volume (Year): 23 (2000)
Issue (Month): 1 ()
Contact details of provider:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese).
If references are entirely missing, you can add them using this form.