What is it about?
The focus of the paper is the presentation of a general risk management framework to tackle the problems of incomplete markets, where individuals are facing uninsurable or undiversifiable risks. The presented risk management framework can be readily applied to many other real-world problems caused by extreme events such as forced unemployment, health emergencies and disability, even including catastrophes and disasters. The example of an incomplete market used in the paper is long-term forced unemployment, which cannot be fully diversified away in the economy.
Featured Image
Why is it important?
The disciplines of risk management can be applied to, and create resolutions for a wide range of present real-world challenges governed by uncertainty and risk. Through suggesting a financial risk management framework adopting new derivative and quantitative finance models, we can develop a well-functioning financial system that supports sustainable economic growth and development.
Perspectives
I hope this paper lends itself to the study of management for the risk of forced unemployment, which can be at least caused by the merging of various disciplines and technologies that is the so-called ''the fourth industrial revolution'' or ''artificial intelligence.'' The fourth industrial revolution equipped with artificial intelligence will highly likely to take away a wide range of our jobs, resulting in in turn individuals' forced unemployment. Along with this line, this paper could have an immediate relevance to the safer and more well-functioning economy, that is encountered by the risk of forced unemployment, as to how to prepare for such threatening revolution to the whole society.
Dr. Seyoung Park
National University of Singapore
Read the Original
This page is a summary of: Unemployment Risks and Optimal Retirement in an Incomplete Market, Operations Research, August 2016, INFORMS,
DOI: 10.1287/opre.2016.1503.
You can read the full text:
Contributors
The following have contributed to this page
