Faculty Members Cite Economic Impact of Hurricane Katrina as Key 2005 Event
Glenn Hubbard, dean and the Russell L. Carson Professor of Finance and Economics, Paul Glasserman, senior vice dean and the Jack R. Anderson Professor of Business, and Bob Bontempo of Executive Education joined faculty members from across the University in offering their reflections on 2005 and projections for 2006 in the Columbia Record’s year-end special edition.
Hubbard and Glasserman identified Hurricane Katrina as one of the critical economic events of 2005. The hurricane may mark a turning point for the risk management industry, Glasserman said. Katrina was one of four hurricanes that struck in a six-week period, causing more than $30 billion in damages, he noted.
“The insurance industry appears to be holding up well in the face of what will surely be the greatest insurance loss to date, but Katrina will have a lasting impact and may reshape the industry, accelerating the integration of insurance and the capital markets,” Glasserman said. “The parallels between what we saw in New Orleans and a potential terrorist attack may also lead to more calls for government backstops for disaster insurance.”
Looking ahead, Hubbard forecast that interest rates will rise this year by more than the markets currently suggest. While some investors may abandon risk management financing, others will enter the market, Glasserman said.
Bontempo also contributed his thoughts on trends in international business, including the publication of The Beijing Consensus, a new book by Joshua Cooper Ramo.
The Record’s year-end special edition is available online.