Paula Jarzabkowski, Rebecca Bednarek, and Paul Spee
- Published in print:
- 2015
- Published Online:
- April 2015
- ISBN:
- 9780199664764
- eISBN:
- 9780191811487
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199664764.003.0007
- Subject:
- Business and Management, Finance, Accounting, and Banking, International Business
Chapter 7 offers a novel theoretical framework for understanding market-making, based on relationality, nested relationality, and relational presence. Relationality occurs between actors, their ...
More
Chapter 7 offers a novel theoretical framework for understanding market-making, based on relationality, nested relationality, and relational presence. Relationality occurs between actors, their practices and the collective practice of the market. Nested relationality captures the interdependent practice of a global market, coordinating individuals from different geographic locations and different firms, writing different types of risk, with different calculative practices into a coherent pattern of trading. Relational presence refers to the social resources that connect and coordinate underwriters around the world, despite a lack of direct or real-time interaction. This theory of market making allows practice scholars to address big questions about market practice, including some of the questions about financial collapse in other financial markets. The chapter concludes with a strong message of caution for the reinsurance market about the potential for social and economic collapse as the multiple, small, taken-for-granted, and critically interrelated practices of this market are eroded.Less
Chapter 7 offers a novel theoretical framework for understanding market-making, based on relationality, nested relationality, and relational presence. Relationality occurs between actors, their practices and the collective practice of the market. Nested relationality captures the interdependent practice of a global market, coordinating individuals from different geographic locations and different firms, writing different types of risk, with different calculative practices into a coherent pattern of trading. Relational presence refers to the social resources that connect and coordinate underwriters around the world, despite a lack of direct or real-time interaction. This theory of market making allows practice scholars to address big questions about market practice, including some of the questions about financial collapse in other financial markets. The chapter concludes with a strong message of caution for the reinsurance market about the potential for social and economic collapse as the multiple, small, taken-for-granted, and critically interrelated practices of this market are eroded.
Paula Jarzabkowski, Rebecca Bednarek, and Paul Spee
- Published in print:
- 2015
- Published Online:
- April 2015
- ISBN:
- 9780199664764
- eISBN:
- 9780191811487
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199664764.003.0006
- Subject:
- Business and Management, Finance, Accounting, and Banking, International Business
Chapter 6 introduces current shifts stemming from the fact that multinational insurance companies are now buying reinsurance as large bundled multi-territory, or even global, deals that cover ...
More
Chapter 6 introduces current shifts stemming from the fact that multinational insurance companies are now buying reinsurance as large bundled multi-territory, or even global, deals that cover multiple disasters. This change has fundamental consequences for how the reinsurance market works, eroding vital principles that have been an important counter-balance to the unpredictability of disasters. Specifically, it marginalizes the process through which consensus price is established. This has been critical for collective risk-bearing and flattens market cycles, which has been critical for stabilizing long-term capital flow. Such changes have a multitude of cascading effects, such as eroding business relationships, increasing the reliance on complex statistical models, and opening the gate for competition from alternative risk transfer products from new players such as hedge funds. Reinsurance is shifting from a market for Acts of God to a market for financial commodities, with potentially devastating effects for the provision of risk cover.Less
Chapter 6 introduces current shifts stemming from the fact that multinational insurance companies are now buying reinsurance as large bundled multi-territory, or even global, deals that cover multiple disasters. This change has fundamental consequences for how the reinsurance market works, eroding vital principles that have been an important counter-balance to the unpredictability of disasters. Specifically, it marginalizes the process through which consensus price is established. This has been critical for collective risk-bearing and flattens market cycles, which has been critical for stabilizing long-term capital flow. Such changes have a multitude of cascading effects, such as eroding business relationships, increasing the reliance on complex statistical models, and opening the gate for competition from alternative risk transfer products from new players such as hedge funds. Reinsurance is shifting from a market for Acts of God to a market for financial commodities, with potentially devastating effects for the provision of risk cover.
