Making a Market for Acts of God: The Practice of Risk Trading in the Global Reinsurance Industry

Reinsurance is a financial market that trades in the risk of unpredictable and devastating disasters - such as Hurricane Katrina, the Tohoku earthquake and tsunami, and the terrorist attacks on the World Trade Centre. Such disasters are increasing in both frequency and severity, with the cost of their losses mounting rapidly. Reinsurance insures insurance companies, enabling them to pay claims arising from these losses. It is thus a market mechanism that is a critical part of the social and economic safety net, helping to pick up the pieces after disasters. Yet, how is the risk of such disasters calculated and traded in a global market?

This book brings to life the reinsurance market through vivid real-life tales that draw from an ethnographic, "fly-on-the-wall" study of the global reinsurance industry over three annual cycles. The authors shadowed underwriters around the world as they traded risks through multiple disasters. For instance, this book takes readers into the desperate hours of pricing Japanese risks during March 2011, while the devastating aftermath of the Tohoku earthquake is unfolding. To show how the market works, the book offers authentic tales gathered from observations of reinsurers in Bermuda, Lloyd's of London, Continental Europe and SE Asia as they evaluate, price and compete for different risks as part of their everyday practice.

Understanding how this market for disasters works has never been more critical given the impact of climate change and increased global connectivity, where a flood in one country can trigger losses to supply chains around the world. The authors develop a novel concept of how global markets work, which advances scholarship and challenges current thinking about how financial markets trade in intangible assets such as risk.

This book will be useful to readers interested in markets for disasters, insurance, reinsurance and financial markets, and academics interested in the practice of financial markets specifically or the practice of strategy and organizations generally.

Paula Jarzabkowski, Professor, Cass Business School, City University London,Rebecca Bednarek, Research Fellow, Cass Business School, City University London,Paul Spee, Senior Lecturer, Queensland University

Professor Paula Jarzabkowski is a Professor of Strategic Management at Cass Business School, City University London. Paula's research focuses on strategy-as-practice in complex contexts and market making in financial industries, particularly insurance and reinsurance. Her research has been foundational in the establishment of the field of strategy-as-practice and she published the first book on strategy-as-practice; 'Strategy as Practice: An Activity-Based Approach'. She is experienced in qualitative methods, most recently leading and conducting the first global ethnography of the reinsurance industry. The relevance of this ethnographic study to industry was recognized in 2013 when she was award the prestigious ESRC Outstanding Impact on Business Award. Her work has appeared in a number of leading management and organizational journals including Academy of Management Journal, Organization Science, and Strategic Management Journal.

Dr. Rebecca Bednarek is a Research Fellow at Cass Business School, City University London. Drawing from a practice-theory perspective, she has an interest in strategizing in pluralistic or paradoxical organizational settings as well as investigating the various practices, such a calculation and evaluation, through which financial markets are constructed. She has developed a strong background in qualitative research methods, including global ethnography, through her studies of the science and reinsurance sectors. Her research has been published in Human Relations, Industrial Relations Journal and Research in the Sociology of Organization.


Dr. Paul Spee is a Senior Lecturer at University Queensland Business School. Informed by social practice theory, his research interest revolves around the social dynamics of strategists and the way heuristics such as strategy tools are adopted and how they influence a firm's strategizing behavior. More recently, his work has expanded to investigate the practice of market making in the reinsurance industry, with a particular emphasis on the socio-materiality and calculative practices involved. His work has been published in leading journals on management and organization theory such as the Academy of Management Journal, International Journal of Management Reviews, Organization Studies and Strategic Organization.