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This study investigates the relationships between environmental, social, and governance (ESG) controversies and insolvency risk in the insurance sector. Drawing from legitimacy and stakeholder theories, the authors explore the impact of ESG controversies on insurers’ insolvency risk and the moderating effect of ESG practices on this relationship.

This study utilises a dataset comprising 120 stock insurance firms spanning from 2011 to 2022. The authors employed system-GMM estimations to control for potential endogeneity and conducted several robustness checks.

ESG controversy positively influences insurers’ insolvency risk, with ESG practices mitigating these positive effects. The Governance (G) component of ESG practices plays a key role in counteracting the effects of ESG controversies on insurance companies’ insolvency risk.

This is the first study to investigate the direct relationship between ESG controversies and insolvency risk in the insurance industry. It underscores the critical influence of stakeholders’ perceptions of the company’s legitimacy, which is determined by the number of ESG controversies undertaken by the insurer company, on its insolvency risk. Additionally, by examining the three components of ESG practices individually, the authors offer insights into how managers can gain a competitive edge, particularly by utilising governance practices as safeguards against the adverse effects of ESG controversies on their financial risk.

After reading this case study, students will be able to understand the impact of cyber threats on businesses; explore the intersection of innovation and ethical considerations; understand the proactive role of entrepreneurs in identifying gaps in traditional industries, such as insurance, and innovating solutions that align with local dynamics; and learn to formulate strategies addressing cultural factors, market gaps and challenges.

The case study follows Hasnain, a prosperous entrepreneur in Pakistan, who was surprised by the news of a cyberattack on Bank Islami. This event, coupled with a personal data breach in his family’s business, triggered Hasnain’s willingness and interest to address the growing threat of cyber risks and attacks. As the progenitor of a digital solutions startup, he identified a gap in the insurance industry’s replication to cyber threats and envisioned the desideratum for a Sharia-compliant cyber-insurance product withal called cyber risk takaful. The case study explores Hasnain’s journey as he contemplated the challenges of introducing cyber risk takaful – a Sharia-compliant insurance solution for businesses and individuals. Apperceiving the low vigilance and perceived costs associated with cyber insurance, Hasnain faced the dilemma of surmounting these barriers in a country where the penetration of insurance, in general, is already minimal. The story raises critical questions: How can Hasnain efficaciously introduce cyber risk takaful to a market reluctant to embrace cyber insurance? What business strategies should he use to engender vigilance and acceptance of this innovative insurance solution? Will businesses and individuals embrace the concept of cyber risk takaful and recognize its paramount in forfending their digital assets?

This case study is designed to meet the educational needs of both undergraduate and postgraduate students, particularly those enrolled in business administration programs. This case study is tailored for students in the final year of BBA and the first year of MBA programs. It is also well-suited for executive education programs that focus on strategic decision-making in the context of emerging market challenges, such as entrepreneurship and corporate strategy. The case study is particularly relevant for courses centered on entrepreneurship, business strategy, strategic management and corporate strategy.

Teaching notes are available for educators only.

CSS11: Entrepreneurship.

This study aims to understand the lapse behavior of life insurance policyholders. Despite being accessible for nearly two centuries, only a small fraction of individuals purchase such policies and many of those who do let them lapse. The belief hypothesis model (BHM) is introduced to elucidate the correlation between policyholders' beliefs and their decisions regarding life insurance lapses.

BHM establishes a comprehensive linkage between core beliefs, external data and the lapse behavior exhibited by policyholders. To derive policyholders’ core beliefs about life insurance lapses, the authors conducted a semistructured, in-depth interview with 42 policyholders and 11 insurance advisors, using a grounded theory approach with zero-order, first-order and second-order coding.

The study's findings reveal that policy lapsation is influenced by various factors such as policyholders' beliefs about life insurance, process-related attitudes, trust in insurers and advisors and personal financial viewpoints. Policyholders who consider life insurance unnecessary or misunderstand its purpose are likelier to lapse their policies. Cumbersome documentation processes and technical issues also contribute to policy lapsation, emphasizing the significance of simplified procedures. Trust in insurers and advisors, personal financial literacy and payment preferences influence policy lapsation.

The findings of this research can be practically applied by companies to improve customer retention and by regulatory bodies to encourage policyholders to honor their insurance commitments.

Distinguishing itself from conventional hypotheses-driven and factor-centric models, BHM integrates consumer beliefs, thus enriching comprehension and decision-making insights.

This study aims to develop a comprehensive framework for discussing sustainability within the insurance industry, extending the traditional Environmental, Social, and Governance (ESG) dimensions to include economic and technological considerations. This inclusion is vital, recognizing that financial stability and the adoption of innovative technologies are fundamental to meeting other sustainability targets.

We base our findings on an extensive literature review, case studies, and interactive workshops with key stakeholders in the insurance industry. Our analytical framework employs Porter's (1985) insurance-specific value chain, complemented by Berliner's (1982) insurability criteria, to distinguish between insurable and non-insurable risks.

Our results show that the insurance industry is sustainable because it actively incorporates and contributes to sustainability goals across environmental, social, economic, and technological dimensions. This is illustrated through the identification of 50 distinct contributions across the insurance value chain, showcasing the sector’s unique position to significantly influence the sustainability discourse.

Addressing the pressing challenges of sustainability and insurability necessitates a strategic, collective response from the global insurance and risk management community. This paper proposes several policy recommendations, including enhancing risk assessment methodologies, diversifying insurance product offerings, encouraging cross-sectoral collaboration, and prioritizing investments in resilience and preventive measures.

By broadening the sustainability discussion to encompass economic and technological facets, this paper enriches the dialogue surrounding the insurance industry’s role in sustainability. It aims to inform decision-makers across the industry, political spheres, and broader society about the necessity of sustainability, fostering pertinent political discussions and highlighting avenues for future research.

Sustainable and resilient infrastructure projects aim to reduce flooding impacts and improve community adaptability. For instance, flood-resistant stilts elevate structures, mitigating flood damage. Comprehensive consideration is crucial when adding elements to housing projects, incurring costs for all involved parties. This study aims to assess the viability of concrete stilts for cost-effective flood mitigation in Malaysian terrace housing.

The study evaluates cost implications through a comparative 5D building information modeling (BIM) cost analysis of stilted and conventional (standard) housing models. This assesses the percentage increase in total cost. Furthermore, a survey of construction professionals was undertaken. The study used online convenience and stratified sampling techniques. Out of the 222 emails that were sent, 27 construction professionals located in Johor, Sabah and Selangor within Malaysia participated in the research survey. Their perspectives on stilt housing prospects and factors for costing such structures were analyzed through a descriptive analysis using SPSS.

The case study models revealed that the incorporation of stilts could lead to a 21.64% increase in the overall cost per unit. This cost increase was primarily attributed to the additional reinforcement required. However, the survey findings highlighted that a majority of construction professionals perceived the cost increment to fall within the range of 10%–20%. Consequently, it becomes imperative to meticulously consider cost factors such as foundational requirements, staircases, and the extended construction duration to effectively curtail expenditures. The prospect of heightened costs potentially posing a threat to profit margins and discouraging developers necessitates careful financial management. Notwithstanding these challenges, the survey's insights underscored that professionals in the construction industry indeed recognize the potential of stilt technology in the realm of flood mitigation and management, particularly within housing projects.

This research has significant practical implications. It provides a precise financial contrast between housing categories using 5D BIM and incorporates construction experts’ viewpoints on raised housing. Enhanced design considerations for raised housing can make it economically viable, offering a cost-effective, nature-based approach to flood mitigation. This approach can bring substantial benefits to residents by reducing flood-related damages and enhancing community resilience.

One of the notable aspects of this research is its originality. It uses a dual quantitative methodology involving modeling and survey techniques to address its objectives effectively. This approach contributes significantly to the relatively limited body of research focused on stilt housing and the application of 5D BIM. By combining these methodologies, the study explores a relatively uncharted area, making a valuable contribution to the field.

The Tax Cuts and Jobs Act of 2017 (TCJA) substantially lowered the corporate tax rate, making tax-exempt municipal bond issues less attractive investments for banks, savings and loan associations and insurance companies. To provide a benefit for small issuers the current Internal Revenue Code has a special provision that allows banks and S&Ls to deduct 80% of the borrowing costs for “bank-qualified” bonds – tax-exempt bonds from issuers who issue no more than $10 million in bonds during a year. This study examines whether the relationship between the true interest cost (TIC) on bank-qualified bonds and other tax-exempt bonds changed with the passage of the TCJA.

Using linear regression analysis this paper compares the TIC of bank-qualified bonds with the TIC of bonds not bank-qualified using a sample of bonds both before and after the passage of TCJA.

Prior to the passage of the TCJA, this study observes that these “bank-qualified” bond issues had a lower true interest cost than other tax-exempt bond issues; however, after passage of the TCJA, the difference in the true interest cost between “bank-qualified” bond issues and other tax-exempt bond issues dramatically decreased.

It appears that the benefit for small bond issuers is greatly reduced after corporate tax rates were significantly lowered. If federal lawmakers wish small issuers to have the same advantage over other tax-exempt municipal bond issuers after passage of TCJA, some changes will need to be made to the Internal Revenue Code to give small issuers an additional advantage when issuing tax-exempt debt.

No other empirical research to date has examined the impact of TCJA on bank-qualified bond issue interest cost.

This study aims to price the risk contribution of general Takaful at the level of tariff cells, considering a spatial dependency framework.

Three different models, including a generalized linear model, a generalized linear mixed model (GLMM) and a spatial generalized linear mixed model (SGLMM), according to the actuarial modeling of general Takaful, are used to price pure risk contribution (PRC).

The results reveal that the SGLMM yields more accurate predictions of the PRC compared to the other models, emphasizing the significance of spatial modeling in this context. Following the estimation of the PRC, the gross contribution according to the mechanism of Takaful models is calculated considering the spatial model.

Considering the similarities between Takaful and insurance, this study addresses the pricing of general Takaful within different Takaful models through a spatial dependency framework, such that the practical implications of the study are applicable for running Takaful's business in both Islamic and non-Islamic countries.

Most studies consider only the social or practical view of Takaful. This study contributes to the broader knowledge and understanding of Takaful by presenting a conceptual understanding of Takaful and then investigates the practical application of pricing risk contribution using innovative modeling of claim frequency and severity at the level of tariff cells.

Hoisting is an essential construction work package, but there is still a high incidence of accidents due to insufficient attention to coping strategies. This study aims to provide decision support to practitioners on safety protocols by developing a multi-stakeholder risk response model and a novel evaluation method.

Firstly, the study summarizes the hoisting risk response strategies system through a literature review and stakeholder theory. Secondly, the study constructed a quantitative theoretical model based on GLS-SEM and questionnaires. Third, the EWM-VA evaluation method was developed to determine the value coefficients of strategies.

The strategic interaction between government and consultants, consultants and builders, and government and builders are in the top three pronounced. Three coping strategies, “Increase funding for lifting equipment and safety devices,” “Improve the quality of safety education and training on lifting construction,” and “Conduct regular emergency rescue drills for lifting accidents,” have the optimal ratio of benefits to costs.

The hoisting risk strategy model from the perspective of multi-interested subjects proposed by the study is based on the global thinking of the project, which reduces the troubles such as the difficulty of pursuing responsibility and the irrational allocation of strategies that were brought by the previously related studies that only considered a single interested subject. In addition, the EWM-VA evaluation method developed in the study also provides new options for evaluating risk strategies and has the potential to be extended to other fields.

The purpose of this study is to identify the causative factors of metro construction safety accidents, analyze the correlation between accidents and causative factors and assist in developing safety management strategies for improving safety performance in the context of the Chinese construction industry.

To achieve these objectives, 13 types and 48 causations were determined based on 274 construction safety accidents in China. Then, 204 cause-and-effect relationships among accidents and causations were identified based on data mining. Next, network theory was employed to develop and analyze the metro construction accident causation network (MCACN).

The topological characteristics of MCACN were obtained, it is both a small-world network and a scale-free network. Controlling critical causative factors can effectively control the occurrence of metro construction accidents. Degree centrality strategy is better than closeness centrality strategy and betweenness centrality strategy.

In practice, it is very difficult to quantitatively identify and determine the importance of different accidents and causative factors. The weights of nodes and edges are failed to be assigned when constructing MCACN.

This study provides a theoretical basis and feasible management reference for construction enterprises in China to control construction risks and reduce safety accidents. More safety resources should be allocated to control critical risks. It is recommended that safety managers implement degree centrality strategy when making safety-related decisions.

This paper establishes the MCACN model based on data mining and network theory, identifies the properties and clarifies the mechanism of metro construction accidents and causations.

Concerns on money laundering (ML) and terrorist financing increased, as ML accounted 2%–5% of the global GDP, with Switzerland, the USA, Canada, India and Russia having high laundering rates. Banks were fined over US$320bn in 2008, but money laundering still accounted for 3.6% of global GDP in 2009, thereby indicating the need for effective regimes. Therefore, this study aims to critically analyze the antimoney laundering (AML)/CFT regime of Somalia, identify loopholes in the regime, raise awareness and propose recommendations for regime improvement.

The qualitative research approach is used to compare Somalia’s AML/CFT regime with the corresponding regime of Malaysia through the black letter method combined with document analysis. Malaysia is selected as a benchmark for two reasons: firstly, it is an Islamic country like Somalia, and secondly, Malaysia has complied with integrity-related standards.

This study revealed that an impactful AML/CTF regime is reached by closing loopholes in the law, reevaluating and improving regulatory agencies and measures, facilitating formal financial services and collaborating with regional and international standard setters. According to the results, Somalia AML/CFT regime is counterproductive in criminalizing offenses; regulating digital currencies and mobile money, disclosures and nonfinancial business and provisions; and governing training requirements for regulatory agencies and financial institutions.

To the best of the author’s knowledge, this paper is the first of its kind in the study of Somalia’s regime building. Also, this study incorporates rich scholarly discourse on effective regime building.