Neil Doherty

Education

Fellowship of Chartered Insurance Institute, 1965

B.A. (Economics), University of York, 1968

B. Phil. (Economics), University of York, 1969

Ph.D., Cranfield Institute of Technology, 1979

Dr. Neil Doherty is the Frederick Ecker Professor Emeritus of Insurance and Risk Management at the Wharton School. He is associated with several of Wharton’s research centers, including the Risk Management and Decision Processes Center and the Financial Institutions Center. A member of the Wharton faculty since 1986, Neil has also consulted with organizations such as Amerco, Dow Chemical, Sears Roebuck, British Petroleum, Merck, GTE, CIGNA, Ace, Aon, Chubb and UPS.

Neil’s principal area of interest is in corporate risk management – focusing on the financial strategies for managing risks that traditionally have been insurable. Such strategies include the use of existing derivatives, the design of new financial products, and the use of capital structure. Neil has written several books in this area including, Corporate Risk Management: A Financial Exposition (1985) and The Financial Theory of Insurance Pricing (1987, with S. D'Arcy) and Integrated Risk Management (2000). A more recent book “The Known, the Unknown and the Unknowable” (2010), (edited jointly with Richard Herring and Frank Diebold) explores the issue in managing the vague and often unmeasurable risks such as those that have recently plagued the global economy. He also has written several papers. Many of the ideas developed in his books (e.g., composites of insurance and debt financing and the use of option models in insurance and reinsurance) are now emerging in the marketplace. Neil is also the coauthor of the economic textbook, Managerial Economics, 2005.

Two additional areas of focus include:

* the economics of risk and information – he has written several papers on the adverse selection, the value of information, and the design of insurance contracts with imperfect information.

* the failure of insurance markets and how they might be redesigned – in this area, he has written on cyclicality of markets, market crises, and the effect of catastrophes.

Neil coauthored several recent reports dealing with topical insurance issues. One of these The Economics of Insurance Intermediaries (2005) examined the underlying economics of insurance brokers in order to understand the issues raised by Elliot Spitzer’s investigations into this industry. Another TRIA and Beyond, (2005) looked at the market for terrorism insurance and examined the case for Federal Terrorism reinsurance. And a third “At War with the Weather: Managing Large Scale Risks in a New Era of Catastrophes” (with H. Kunreuther and others; 2009, MIT Press) looks critically at the market for catastrophic risk. Neil is a graduate of the University of York and Cranfield Institute of Technology, where he received his doctorate in Economics.

Keith W Weigelt, W. Bruce Allen, Neil A Doherty, Edwin Mansfield, Managerial Economics: Theory, Applications and Cases (2005)

Neil A Doherty, Esther Goldsmith, Scott E. Harrington, Howard Kunreuther, Erwann MichelKerjan, Mark V. Pauly, Irv Rosenthal, Peter Schmeidler, TRIA and Beyond: Terrorism Risk Financing in the U.S (2005)

Past Courses

BEPP305 RISK MANAGEMENT

The last financial crisis and subsequent recession provide ample evidence that failure to properly manage risk can result in disaster. Individuals and firms confront risk in nearly all decisions they make. People face uncertainty in their choice of careers, spending and saving decisions, family choices and many other facets of life. Similarly, the value that firms create by designing and marketing good products is at risk from a variety of sources. The bankruptcy of a key supplier, sharp rise in cost of financing, destruction of an important asset, impact of global warming, or a liability suit can quickly squander the value created by firms. In extreme cases, risky outcomes can bankrupt a firm, as has happened recently to manufacturers of automobile parts and a variety of financial service firms. The events since the Global Financial Crisis also offer stark reminders that risk can impose significant6 costs on individuals, firms, governments, and society as a whole. This course explores how individuals and firms assess and evaluate risk, examines the tolls available to successfuly mange risk and discusses realworld phenomena that limit the desired amount of risksharing. Our focus is primarily on explaining the products and institutions that will serve you better when making decisions in your future careers and lives.

BEPP805 RISK MANAGEMENT

The last financial crisis and subsequent recession provide ample evidence that failure to properly manage risk can result in disaster. Individuals and firms confront risk in nearly all decisions they make. People face uncertainty in their choice of careers, spending and saving decisions, family choices, and many other facets of life. Similarly, the value that firms create by designing and marketing good products is at risk from a variety of sources. The bankruptcy of a key supplier, sharp rise in cost of financing, destruction of an important asset, impact of global warming, or a liability suit can quickly squander the value created by firms. In extreme cases, risky outcomes can bankrupt a firm, as has happened recently to manufacturers of automobile parts and a variety of financial service firms. The events since the Global Financial Crisis also offer stark reminders that risk can impose significant costs on individuals, firms, governments, and societ6y as a whole. This course explores how individuals and firms assess and evaluate risk, examines the tools available to successfully manage risk, and discusses realworld phenomena that limit the desired amount of risksharing. Our focus is primarily on explaining the products and institutions that will serve you better when making decisisions in your future careers and lives.

MGEC612 MICROECON FOR MGR ADV.

This course will cover the economic foundations of business strategy and decisionmaking in market environments with other strategic actors and less than full information, as well as advanced pricing strategies. Topics include oligopoly models of market competition, creation, and protection, sophisticated pricing strategies for consumers with different valuations or consumers who buy multiple units (e.g. price discrimination, bundling, twopart tariffs), strategies for managing risk and making decisions under uncertainty, asymmetric information and its consequences for markets, and finally moral hazard and principleagent theory with application to incentive contacts.

• MillerSherrerd MBA Core Teaching Award, 2001
• MillerSherrerd MBA Core Teaching Award, 1998

• Undergraduate Excellence in Teaching Award, 1997

• Leveraging Risk Management, Knowlege@Wharton 03/01/2006

• Are Eliot Spitzer’s Insurance Lawsuits Hitting the Wrong Targets?, Knowlege@Wharton 10/19/2005

• The Financial Risks of Terrorism: Balancing Public and Private Roles, Knowlege@Wharton 09/07/2005

• A Finger on the Pulse of Berkshire Hathaway and Warren Buffett, Knowlege@Wharton 06/01/2005

• Can AIG Stay on Top?, Knowlege@Wharton 06/01/2005

Knowledge @ Wharton

• Micro Insurance: A Safety Net With Too Many Holes?, Knowledge @ Wharton 09/30/2009
• One War We Shouldn’t Avoid: A New Approach to Reducing the Cost of Future Catastrophes, Knowledge @ Wharton 07/08/2009
• For Airlines and Others, Even the Best Fuelprice Bets Can Lead to Turbulence, Knowledge @ Wharton 11/12/2008
• Leveraging Risk Management, Knowledge @ Wharton 03/01/2006
• Are Eliot Spitzer’s Insurance Lawsuits Hitting the Wrong Targets?, Knowledge @ Wharton 10/19/2005
• The Financial Risks of Terrorism: Balancing Public and Private Roles, Knowledge @ Wharton 09/07/2005
• Can AIG Stay on Top?, Knowledge @ Wharton 06/01/2005
• A Finger on the Pulse of Berkshire Hathaway and Warren Buffett, Knowledge @ Wharton 06/01/2005
• Insurance Industry Conference Looks at Terrorism, Drug Coverage, Malpractice Insurance and M&As, Knowledge @ Wharton 01/28/2004
• The New Business Reality, Knowledge @ Wharton 01/30/2002
• How Will Insurers Deal With Their Most Expensive Catastrophe?, Knowledge @ Wharton 09/26/2001
• China’s Great Leap Outward, Knowledge @ Wharton 03/21/2000