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Interdisciplinary advances on behavioural theories of financial risk-taking: Innovative insights from a video-ethnography of live trading in global reinsurance markets

Final Report Summary - ETHNOGRAPHYOFRISK (Interdisciplinary advances on behavioural theories of financial risk-taking: Innovative insights from a video-ethnography of live trading in global reinsurance markets)

The overarching research aim of this Fellowship was to develop a fine-grained, interdisciplinary and methodologically innovative approach to understanding how people interact with tools and technologies in the reinsurance-trading process, and the implications of those interactions for evaluating and making decisions on risks. This project fully achieved its objectives by producing critical results that were communicated to a wide audience, ranging from academics to practitioners and the public.

First, Professor Jarzabkowski has produced high quality research and has effectively disseminated results to both the US and European academic community. She published numerous peer-reviewed papers in top journals (e.g. Academy of Management Journal, British Journal of Management, Human Relations) and also received conference Best Paper awards for the academic quality of these papers, as well as having a range of papers under review at leading journals. Most recently, she published a research monologue entitled ‘Making a Market for Acts of God’ with Oxford University Press. This book, which is the first global ethnography of a finance industry, explains the practice of trading risk in the global reinsurance industry, targeting primarily academics but also informed practitioners interested in financial markets, risk, insurance, reinsurance, and the technologies associated with trading in risk. In particular, it takes a novel practice-theoretical approach to the coordination and functioning of global markets. The book develops the new concept of relational presence to explain how market participants who are distributed around the globe are able to interact, being present with each other through a nexus of relational practices that enable the construction and stabilizing of market functions such as pricing and trading risk. Yet the book also cautions about the dangers inherent in disruptions to such relational practices. The Fellow’s world-leading research in these journals and books has been built upon interdisciplinary frameworks at the intersection of economic sociology, social studies of finance and practice theory, so advancing theories of risk-taking beyond dominant economics-based approaches, and also elaborating upon and extending social studies of finance.

Second, the Fellow has presented the academic findings of this study in the United States, Canada, the United Kingdom and Continental Europe and Australia. A total of sixteen invited academic presentations on the research were conducted during the reporting period in universities such as Cornell University, London School of Economics, Massachusetts Institute of Technology, University of California, Irvine, and Queensland University. She has also organized four academic workshops where leading scholars were brought together to explore current theoretical perspectives and emerging research on various subjects related to her research, with the aim of generating connections between approaches and highlighting areas for future research. In accordance with these results, the Fellow has developed and widely communicated to the academic audience an innovative approach and findings to understand risk trading from a practice-theory perspective and has outlined a novel methodological approach for tracing such global practices.

Third, Professor Jarzabkowski has developed a suite of tools and frameworks to diagnose industry change and enable firms to take action. These practitioner-oriented outcomes also signaled the potential dangers of systemic risk to an industry with a critical economic and social role. She has communicated these findings, together with other critical research results, to industry practitioners through industry reports, media articles, industry presentations and focused firm-specific presentations as well as developing a series of seven training Masterclasses. She has given several keynote presentations at leading industry conferences in the main (re)insurance markets including London, Bermuda, Continental Europe and the USA, has delivered several talks at general and industry-specific forums, including the 2014 World Bank Forum on Understanding Risk and her research has been extensively discussed in the insurance trade and main stream business media – with twenty-five different media articles and live news reports about her work. Her work has also been practically adopted by industry members. For instance, she organized and delivered (a) two interactive industry 3-day professional workshops that captured the current debates and provided practitioners with a suite of analytic and diagnostic tools and frameworks (the series of seven Masterclasses) to tackle the industry challenges, and (b) a Reinsurance Strategic Think Tank for industry leaders where a group of senior executives (e.g. CEOs, Directors, Chairmen) from different parts of the market came together to critically examine strategic issues in a structured manner conductive to debate, problem solving and forecasting. Furthermore, she made all this material continuously and freely available by developing a very successful (over 28,000 views since April 2014) dedicated online resource to perpetuate knowledge exchange: http://www.cassknowledge.com/research/author/paula-jarzabkowski. These activities have enabled the Fellow to have continuous and ongoing engagement with the industry, which will form the basis for future research topics and research grants.

Finally, consistent with the aims of these Marie Curie International Outgoing Fellowships, Professor Jarzabkowski has developed into a thought leader on practice-theory approaches to financial risk trading, who comments knowledgeably on the European reinsurance sector, and is internationally acknowledged for innovative methodological and theoretical approaches to and informed commentary on these important global issues. For example, she has been asked by BCC worldwide news and BBC radio to comment on live news reporting about the socio-economic implications of the 2015 Nepal earthquake in relation to the (re)insurance industry. Her views on the implications of recent changes in the reinsurance industry have been also covered live on Bloomberg morning business news in May 2015.