February 13, 2013

Big Ideas: Yijia Lin

Yijia Lin
Dr. Yijia Lin, assistant professor of finance at the UNL College of Business Administration, has published numerous articles in the area of risk management since joining the CBA faculty in 2007. She currently has three forthcoming articles in the Journal of Risk and Insurance.
Her emphasis is primarily in three fields of study: mortality/longevity risk management, corporate/enterprise risk management and downside risk management.
The practical application of Lin’s research is what makes it so appealing to the financial and insurance industries. She uses traditional risk management models but also brings a unique perspective in how to effectively transfer those models to the capital markets.
“My main interest is transferring mortality and longevity risk to the capital market,” Lin said. “It’s an important topic for both the insurance industry and when looking at pension plans. In terms of the public we have an issue of whether the U.S. government has enough funds to pay out to retirees in the future.”
Lin analyzes mortality and longevity rates to identify risk and ensure monies are available to pay benefits.
Lin’s research examines how to price securities in the capital market. She uses dynamic research models to help identify accurate pricing structures. In related studies she also identifies which hedging strategies are most effective for companies to employ in order to fund pension plans.
Another new concept Lin studies related to risk management is enterprise risk management (ERM).
“Enterprise risk management proposes that we manage risk in a systematic way,” she said. “In traditional risk management we use fire insurance to prepare for a fire risk which pushes liability insurance to pay off the liability risk. ERM calls into question whether this is the most cost effective way to deal with a risk of fire. We need to pool the risks together to get a diversification benefit and look at the aggregate risk involved.”
Many companies have now begun adopting and improving ERM models to help maintain positive credit ratings.
“The new models help apply more holistic approaches to better price, finance and fund insurance rates and benefits,” she said.
Lin received her Ph.D. in risk management insurance from Georgia State University in 2006.