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123-420: An actuary is a professional with advanced mathematical skills who deals with the measurement and management of risk and uncertainty. These risks can affect both sides of the balance sheet and require asset management , liability management, and valuation skills. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms. The name of

246-778: A de facto fault-based regime all along, and the American Law Institute expressly backed a return to tests associated with negligence for design and warning defects with the 1998 publication of the Restatement of Torts, Third: Products Liability . This attempt to resurrect negligence and to limit strict liability to its original home in manufacturing defects "has been highly controversial among courts and scholars." In arguing in 2018 that U.S. product liability law as restated in 1998 had come full circle back to where it started in 1964, two law professors also conceded that "some courts" continue to "tenaciously cling[] to

369-412: A jury trial in the world, the highest awards of monetary damages in the world (frequently in the millions of dollars for pain and suffering noneconomic damages and in rare cases soaring into the billions for punitive damages ), and the most extensive right to discovery in the world. No other country has adopted the U.S. standard of disclosure of information that is "reasonably calculated to lead to

492-463: A London draper named John Graunt showed that there were predictable patterns of longevity and death in a defined group, or cohort , of people, despite the uncertainty about the future longevity or mortality of any one individual. This study became the basis for the original life table . Combining this idea with that of compound interest and annuity valuation, it became possible to set up an insurance scheme to provide life insurance or pensions for

615-432: A code of ethics that covers their communications and work products. As an outgrowth of their more traditional roles, actuaries also work in the fields of risk management and enterprise risk management for both financial and non-financial corporations. Actuaries in traditional roles study and use the tools and data previously in the domain of finance. The Basel II accord for financial institutions (2004), and its analogue,

738-431: A company's prospects. In economics, as in finance, risk is often defined as quantifiable uncertainty about gains and losses. Environmental risk arises from environmental hazards or environmental issues . In the environmental context, risk is defined as "The chance of harmful effects to human health or to ecological systems". Environmental risk assessment aims to assess the effects of stressors, often chemicals, on

861-600: A consensus in favor of consumer protection , which would eventually cause Congress to enact several landmark federal product safety and vehicle safety statutes. Between 1960 and 1977, Congress passed at least forty-two laws dealing with consumer and worker safety. Second, American academic experts in the field of law and economics developed new theories that helped to justify strict liability, such as those articulated by Guido Calabresi in The Costs of Accidents (1970). To this, Kyle Graham adds three more factors: (3)

984-421: A duty and a breach) and res ipsa loquitur (an inference of negligence under certain conditions). Rather than focus on the behavior of the manufacturer (as in negligence), strict liability claims focus on the product itself. Under strict liability, the manufacturer is liable if the product is defective, even if the manufacturer was not negligent in making that product defective. Under a strict liability theory,

1107-532: A fair apportionment of the risks inherent in modern technological production." The Directive gave each member state the option of imposing a liability cap of 70 million euros per defect. Unlike the United States, the Directive only imposed strict liability upon "producers"—that is, manufacturers of raw materials, component parts, and finished products, as well as importers—and deviated significantly from

1230-520: A financial liability will be worth at different points in the future. Since neither of these kinds of analysis are purely deterministic processes, stochastic models are often used to determine frequency and severity distributions and the parameters of these distributions. Forecasting interest yields and currency movements also plays a role in determining future costs, especially on the life side. Actuaries do not always attempt to predict aggregate future events. Often, their work may relate to determining

1353-420: A group of people, and to calculate with some degree of accuracy each member's necessary contributions to a common fund, assuming a fixed rate of interest. The first person to correctly calculate these values was Edmond Halley . In his work, Halley demonstrated a method of using his life table to calculate the premium someone of a given age should pay to purchase a life-annuity. James Dodson 's pioneering work on

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1476-647: A guideline for setting the pass mark for any examination. If the CAS determines that 70% of all candidates have demonstrated sufficient grasp of the syllabus material, then those 70% should pass. Similarly, if the CAS determines that only 30% of all candidates have demonstrated sufficient grasp of the syllabus material, then only those 30% should pass." Actuaries have appeared in works of fiction including literature, theater, television, and film. At times, they have been portrayed as "math-obsessed, socially disconnected individuals with shockingly bad comb-overs", which has resulted in

1599-405: A highly quantified way. The technique is usually referred to as probabilistic risk assessment (PRA). See WASH-1400 for an example of this approach. The incidence rate can also be reduced due to the provision of better occupational health and safety programmes. Security is freedom from, or resilience against, potential harm caused by others. A security risk is "any event that could result in

1722-470: A hybrid test in which the first does not apply to defects that are too complex). Risk-benefit analysis, of course, can be seen as a way of measuring the reasonableness of the defendant's conduct—or in other words, negligence. A neo-conservative turn among many American courts and tort scholars during the 1980s led to a recognition that liability in design defect and failure-to-warn cases had never been entirely strict, or had been operating in some respects as

1845-400: A large organization or simply crossing the road. Intuitive risk management is addressed under the psychology of risk below. Risk management refers to a systematic approach to managing risks, and sometimes to the profession that does this. A general definition is that risk management consists of "coordinated activities to direct and control an organization with regard to risk". ISO 31000 ,

1968-618: A mixed response amongst actuaries themselves. Risk The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas ( business , economics , environment , finance , information technology , health , insurance , safety , security etc). This article provides links to more detailed articles on these areas. The international standard for risk management, ISO 31000 , provides principles and general guidelines on managing risks faced by organizations . The Oxford English Dictionary (OED) cites

2091-399: A modification of warranty law "tailored to meet modern needs," while Prosser argued in 1960 that strict liability in tort ought to be "declared outright" without "an illusory contract mask." Ultimately, it was Prosser's view which prevailed. The first step towards modern product liability law occurred in the landmark New York case of MacPherson v. Buick Motor Co. (1916), which demolished

2214-431: A pool of risks including market risk, credit risk, operational risk, interest rate risk, mortality risk, longevity risks, etc. The term "risk" has a long history in insurance and has acquired several specialised definitions, including "the subject-matter of an insurance contract", "an insured peril" as well as the more common "possibility of an event occurring which causes injury or loss". Occupational health and safety

2337-637: A reasonable drug manufacturer that as of late 1993, none had ever been held liable in an English court under a negligence theory (although there had been a number of out-of-court settlements). The first international effort in Europe to harmonize product liability resulted in the Council of Europe Convention on Products Liability in regard to Personal Injury and Death (the Strasbourg Convention ) in 1977, which never entered into force: while it

2460-616: A result of the thalidomide scandal and the victims' ensuing struggle during the 1960s to obtain adequate compensation, especially in the UK and West Germany. The thalidomide scandal highlighted the need for a strict product liability claim sounding in tort because the affected infants were mere bystander victims, as distinguished from product buyers or users. After the UK formed the National Health Service (NHS) in 1948, 80% of pharmaceuticals were provided to patients through

2583-622: A simple summary, defining risk as "the possibility of something bad happening". The International Organization for Standardization (ISO) 31073 provides basic vocabulary to develop common understanding on risk management concepts and terms across different applications. ISO 31073 defines risk as: effect of uncertainty on objectives Note 1: An effect is a deviation from the expected. It can be positive, negative or both, and can address, create or result in opportunities and threats . Note 2: Objectives can have different aspects and categories, and can be applied at different levels. Note 3: Risk

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2706-598: A small number of states, used vehicles. In the United States, "cars are typically the second most valuable asset most people own, outranked only by their home." Although European observers followed Greenman and Section 402A "with great interest", European countries did not initially adopt such a doctrine. For example, after the landmark case of Donoghue v Stevenson [1932] (which followed MacPherson ), UK product liability law did not change any further for many decades, despite "trenchant academic criticism". Strict liability for defective products finally came to Europe as

2829-417: A total of 301,766 civil cases. Product liability was the dominant category both in terms of percentage of total active MDLs (32.9%) and percentage of total civil cases centralized into MDLs (91%). Among the factors which led to the large numbers of product liability cases seen today in the United States are relatively low fees for filing lawsuits, the availability of class actions , the strongest right to

2952-484: A total of only 798 product liability claims had been filed in the national courts of EU member states. As of 2020, the much smaller number of cases in the UK meant that "English case law ha[d] barely begun to consider" many of the product liability issues already explored thoroughly by American courts, which therefore required an English legal treatise to cite to a "significant proportion" of American cases in order to illustrate where English product liability law could go in

3075-482: A university setting. In others, such as the US, most study takes place during employment through a series of examinations. In the UK, and countries based on its process, there is a hybrid university-exam structure. As these qualifying exams are extremely rigorous, support is usually available to people progressing through the exams. Often, employers provide paid on-the-job study time and paid attendance at seminars designed for

3198-500: A valid claim. For a variety of complex historical reasons beyond the scope of this article, personal injury lawsuits in tort for monetary damages were virtually nonexistent before the Second Industrial Revolution of the 19th century. As a subset of personal injury cases, product liability cases were extraordinarily rare, but it appears that in the few that were brought, the general rule at early common law

3321-521: A variety of hazards that may result in accidents causing harm to people, property and the environment. In the safety field, risk is typically defined as the "likelihood and severity of hazardous events". Safety risks are controlled using techniques of risk management. A high reliability organisation (HRO) involves complex operations in environments where catastrophic accidents could occur. Examples include aircraft carriers, air traffic control, aerospace and nuclear power stations. Some HROs manage risk in

3444-494: Is a questionnaire screening tool, used to provide individuals with an evaluation of their health risks and quality of life. Health, safety, and environment (HSE) are separate practice areas; however, they are often linked. The reason is typically to do with organizational management structures; however, there are strong links among these disciplines. One of the strongest links is that a single risk event may have impacts in all three areas, albeit over differing timescales. For example,

3567-416: Is an individual or collaborative undertaking planned to achieve a specific aim. Project risk is defined as, "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project's objectives". Project risk management aims to increase the likelihood and impact of positive events and decrease the likelihood and impact of negative events in the project. Safety is concerned with

3690-476: Is concerned with occupational hazards experienced in the workplace. The Occupational Health and Safety Assessment Series (OHSAS) standard OHSAS 18001 in 1999 defined risk as the "combination of the likelihood and consequence(s) of a specified hazardous event occurring". In 2018 this was replaced by ISO 45001 "Occupational health and safety management systems", which use the ISO Guide 73 definition. A project

3813-432: Is narrowly focused on computer security, information risks extend to other forms of information (paper, microfilm). Insurance is a risk treatment option which involves risk sharing. It can be considered as a form of contingent capital and is akin to purchasing an option in which the buyer pays a small premium to be protected from a potential large loss. Insurance risk is often taken by insurance companies, who then bear

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3936-448: Is no negligence, however, public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market. It is evident that the manufacturer can anticipate some hazards and guard against the recurrence of others, as the public cannot. Those who suffer injury from defective products are unprepared to meet its consequences. The cost of an injury and

4059-494: Is not unreasonably dangerous when used for its proper purpose), unless specifically disclaimed by the manufacturer or the seller. They are implied by operation of law from the act of manufacturing, distributing, or selling the product. Claims involving real estate (especially mass-produced tract housing ) may also be brought under a theory of implied warranty of habitability. A basic negligence claim consists of proof of As demonstrated in cases such as Winterbottom v. Wright ,

4182-403: Is record of a 14th-century contract to insure a shipment of wheat. In 1350, Lenardo Cattaneo assumed "all risks from act of God, or of man, and from perils of the sea" that may occur to a shipment of wheat from Sicily to Tunis up to a maximum of 300 florins . For this he was paid a premium of 18%. During the 17th century, a more scientific basis for risk management was being developed. In 1662,

4305-450: Is the convergence of modern finance theory with actuarial science. In the early 20th century, some economists and actuaries were developing techniques that can be found in modern financial theory, but for various historical reasons, these developments did not achieve much recognition. In the late 1980s and early 1990s, there was a distinct effort for actuaries to combine financial theory and stochastic methods into their established models. In

4428-472: Is the use of computers to store, retrieve, transmit, and manipulate data. IT risk (or cyber risk) arises from the potential that a threat may exploit a vulnerability to breach security and cause harm. IT risk management applies risk management methods to IT to manage IT risks. Computer security is the protection of IT systems by managing IT risks. Information security is the practice of protecting information by mitigating information risks. While IT risk

4551-450: Is to the public interest to place the responsibility for whatever injury they may cause upon the manufacturer, who, even if he is not negligent in the manufacture of the product, is responsible for its reaching the market. However intermittently such injuries may occur and however haphazardly they may strike, the risk of their occurrence is a constant risk and a general one. Against such a risk there should be general and constant protection and

4674-432: Is traditionally limited to products in the form of tangible personal property . The overwhelming majority of countries have strongly preferred to address product liability through legislative means. In most countries, this occurred either by enacting a separate product liability act, adding product liability rules to an existing civil code, or including strict liability within a comprehensive Consumer Protection Act. In

4797-576: Is unavailable for defects that merely render the product unusable (or less useful), and hence cause only economic injury, but do not cause personal injury or damage to other property. Breach of warranty actions governed by Article 2 of the Uniform Commercial Code also often fail to provide adequate remedies in such situations. The best-known examples of consumer protection statutes for product defects are lemon laws , which provide protection to purchasers of defective new vehicles and, in

4920-436: Is usually expressed in terms of risk sources, potential events, their consequences and their likelihood. This definition was developed by an international committee representing over 30 countries and is based on the input of several thousand subject-matter experts. It was first adopted in 2002 for use in standards. Its complexity reflects the difficulty of satisfying fields that use the term risk, in different ways. Some restrict

5043-457: The Roman empire , associations were formed to meet the expenses of burial, cremation, and monuments—precursors to burial insurance and friendly societies . A small sum was paid into a communal fund on a weekly basis, and upon the death of a member, the fund would cover the expenses of rites and burial. These societies sometimes sold shares in the building of columbāria , or burial vaults, owned by

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5166-1004: The Solvency II accord for insurance companies (in force since 2016), require institutions to account for operational risk separately, and in addition to, credit , reserve , asset , and insolvency risk. Actuarial skills are well suited to this environment because of their training in analyzing various forms of risk, and judging the potential for upside gain, as well as downside loss associated with these forms of risk. Actuaries are also involved in investment advice and asset management , and can be general business managers and chief financial officers . They analyze business prospects with their financial skills in valuing or discounting risky future cash flows, and apply their pricing expertise from insurance to other lines of business. For example, insurance securitization requires both actuarial and finance skills. Actuaries also act as expert witnesses by applying their analysis in court trials to estimate

5289-476: The Supreme Court of California openly articulated and adopted the doctrine of strict liability in tort for defective products. Greenman heralded a fundamental shift in how Americans thought about product liability towards a theory of enterprise liability—instead of basing liability on the defendant's "fault" or "warranty", the defendant's liability should be predicated, as a matter of public policy, on

5412-508: The level premium system led to the formation of the Society for Equitable Assurances on Lives and Survivorship (now commonly known as Equitable Life ) in London in 1762. This was the first life insurance company to use premium rates that were calculated scientifically for long-term life policies, using Dodson's work. After Dodson's death in 1757, Edward Rowe Mores took over the leadership of

5535-478: The variance (or standard deviation) of asset prices. More recent risk measures include value at risk . Because investors are generally risk averse , investments with greater inherent risk must promise higher expected returns. Financial risk management uses financial instruments to manage exposure to risk. It includes the use of a hedge to offset risks by adopting a position in an opposing market or investment. In financial audit , audit risk refers to

5658-438: The "fall of the citadel of privity." The Henningsen court helped articulate the rationale for the imminent shift from breach of warranty (sounding in contract) to strict liability (sounding in tort) as the dominant theory in product liability cases, but did not actually impose strict liability for defective products. The third step was the landmark California case of Greenman v. Yuba Power Products, Inc. (1963), in which

5781-489: The "unreasonably dangerous" qualifier implicitly connotes some sense of the idea of "fault" which Traynor was trying to exorcise from product liability, it was subsequently rejected as incompatible with strict liability for defective products by Alaska, California, Georgia, New Jersey, New York, Puerto Rico and West Virginia. Early proponents of strict liability believed its economic impact would be minor because they were focused on manufacturing defects. They failed to foresee

5904-411: The 1930s and 1940s, rigorous mathematical foundations for stochastic processes were developed. Actuaries began to forecast losses using models of random events instead of deterministic methods . Computers further revolutionized the actuarial profession. From pencil-and-paper to punchcards to microcomputers, the modeling and forecasting ability of the actuary has grown vastly. Another modern development

6027-561: The 1970s; and (5) the resistance of the Uniform Commercial Code 's editorial board to extending warranties to bystander victims before 1966—in states whose legislatures had not already acted, state courts were more receptive to extending the common law to grant bystanders a strict liability tort claim. Prosser inexplicably imposed in Section 402A a requirement that a product defect must be "unreasonably dangerous." Since

6150-534: The 1980s explosion in product liability cases; the vast majority of American lawsuits are heard in state courts and not federal courts. In subsequent decades, American federal judges began to heavily rely upon the multidistrict litigation (MDL) statute ( 28 U.S.C.   § 1407 ) to manage an ever-increasing number of complex civil cases. For the first time, by the end of 2018 more than half (51.9%) of all pending American federal civil cases had been centralized into MDLs, with 156,511 cases in 248 MDLs out of

6273-499: The 21st century, the profession, both in practice and in the educational syllabi of many actuarial organizations, combines tables, loss models, stochastic methods, and financial theory, but is still not completely aligned with modern financial economics . As there are relatively few actuaries in the world compared to other professions, actuaries are in high demand, and are highly paid for the services they render. The actuarial profession has been consistently ranked for decades as one of

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6396-457: The American model by deciding not to impose strict liability on purely domestic distributors or retailers. By using the 20-year-old Section 402A as their model, the Directive's drafters decided not to include a number of changes such as the subsequent differentiation between three major types of product defects used in the US. As of 2003, on the one hand, product liability had expanded around

6519-484: The British Sale of Goods Act 1893 . During the 1940s, 1950s, and 1960s, American law professors Fleming James Jr. and William Prosser published competing visions for the future of the nascent field of product liability. James acknowledged that traditional negligence and warranty law were inadequate solutions for the problems presented by defective products, but argued in 1955 those issues could be resolved by

6642-510: The Directive), Brazil (September 1990), Peru (November 1991), Australia (July 1992), Russia (February 1992), Switzerland (December 1992), Argentina (October 1993), Japan (June 1994), Taiwan (June 1994), Malaysia (August 1999), South Korea (January 2000), Thailand (December 2007), and South Africa (April 2009). As of 2015, in most countries outside of the United States and European Union, "product liability remains largely

6765-450: The NHS. By assuming financial responsibility for the provision of drugs, the government had thereby barred the majority of mothers (the actual product users) and their infants from bringing breach of warranty claims sounding in contract. For such victims, their only possible claim was a negligence claim sounding in tort, but it is so difficult under English law to prove the standard of care of

6888-869: The Restatement's final draft in 1964 and published it in 1965; the Restatement codified the Greenman doctrine in Section 402A. Greenman and Section 402A "spread like wildfire across America". The highest courts of nearly all U.S. states and territories (and a few state legislatures ) embraced this "bold new doctrine" during the late 1960s and 1970s. As of 2018, the five exceptions who have rejected strict liability are Delaware, Massachusetts, Michigan, North Carolina, and Virginia. In four of those states, warranty law has been so broadly construed in favor of plaintiffs that only North Carolina truly lacks anything resembling strict liability in tort for defective products. (North Carolina's judiciary never attempted to adopt

7011-523: The United States began to look for ways to ameliorate the harsh effects of such legal doctrines, as did the British Parliament . For example, one method was to find implied warranties implicit in the nature of certain contracts; by the end of the 19th century, enough U.S. states had adopted an implied warranty of merchantable quality that this warranty was restated in statutory form in the U.S. Uniform Sales Act of 1906, which drew inspiration from

7134-658: The United States, product liability law was developed primarily through case law from state courts as well as the Restatements of the Law produced by the American Law Institute (ALI). The United States and the European Union's product liability regimes are the two leading models for how to impose strict liability for defective products, meaning that "[v]irtually every product liability regime in

7257-552: The United States, the claims most commonly associated with product liability are negligence , strict liability , breach of warranty , and various consumer protection claims. Warranties are statements by a manufacturer or seller concerning a product during a commercial transaction. Warranty claims historically required privity between the injured party and the manufacturer or seller; in plain English , they must be dealing directly with one another. As noted above, this requirement

7380-459: The United States, the profession was rated as the best profession by CareerCast, which uses five key criteria to rank jobs—environment, income, employment outlook, physical demands, and stress, in 2010, 2013, and 2015. In other years, it remained in the top 20. Becoming a fully credentialed actuary requires passing a rigorous series of professional examinations, usually taking several years. In some countries, such as Denmark, most study takes place in

7503-540: The actuarial profession has been reluctant to specify the pass marks for its examinations. To address concerns that there are pre-existing pass/fail quotas, a former chairman of the Board of Examiners of the Institute and Faculty of Actuaries stated: "Although students find it hard to believe, the Board of Examiners does not have fail quotas to achieve. Accordingly, pass rates are free to vary (and do). They are determined by

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7626-454: The application of existing doctrines in contract and tort. The Greenman majority opinion was authored by then-Associate Justice Roger J. Traynor , who cited to his own earlier concurring opinion in Escola v. Coca-Cola Bottling Co. (1944). In Escola , now also widely recognized as a landmark case, Justice Traynor laid the foundation for Greenman with these words: Even if there

7749-411: The casualty side, this analysis often involves quantifying the probability of a loss event, called the frequency, and the size of that loss event, called the severity. The amount of time that occurs before the loss event is important, as the insurer will not have to pay anything until after the event has occurred. On the life side, the analysis often involves quantifying how much a potential sum of money or

7872-711: The common methods of management, the measurements of risk and even the definition of risk differ in different practice areas. This section provides links to more detailed articles on these areas. Business risks arise from uncertainty about the profit of a commercial business due to unwanted events such as changes in tastes, changing preferences of consumers, strikes, increased competition, changes in government policy, obsolescence etc. Business risks are controlled using techniques of risk management . In many cases they may be managed by intuitive steps to prevent or mitigate risks, by following regulations or standards of good practice, or by insurance . Enterprise risk management includes

7995-452: The compromise of organizational assets i.e. the unauthorized use, loss, damage, disclosure or modification of organizational assets for the profit, personal interest or political interests of individuals, groups or other entities." Security risk management involves protection of assets from harm caused by deliberate acts. Risk is ubiquitous in all areas of life and we all manage these risks, consciously or intuitively, whether we are managing

8118-432: The context of public health , risk assessment is the process of characterizing the nature and likelihood of a harmful effect to individuals or populations from certain human activities. Health risk assessment can be mostly qualitative or can include statistical estimates of probabilities for specific populations. A health risk assessment (also referred to as a health risk appraisal and health & well-being assessment)

8241-451: The corresponding academic discipline is actuarial science . While the concept of insurance dates to antiquity, the concepts needed to scientifically measure and mitigate risks have their origins in the 17th century studies of probability and annuities. Actuaries of the 21st century require analytical skills, business knowledge, and an understanding of human behavior and information systems to design programs that manage risk, by determining if

8364-412: The cost of financial liabilities that have already occurred, called retrospective reinsurance , or the development or re-pricing of new products. Actuaries also design and maintain products and systems. They are involved in financial reporting of companies' assets and liabilities. They must communicate complex concepts to clients who may not share their language or depth of knowledge. Actuaries work under

8487-401: The court then held that such defendants were liable not only to direct customers and users, but also to any innocent bystanders randomly injured by defective products. In turn, Prosser was able to propagate the Greenman holding to a nationwide audience because the American Law Institute had appointed him as the official reporter of the Restatement of Torts, Second . The Institute approved

8610-403: The defendant usually possesses most of the extant evidence of a product defect, in most European countries it is "very difficult, if not impossible, for a victim or her lawyer to investigate a product liability case." Other obstacles—especially in civil law countries—include high filing fees, no right to a jury trial, low damages for pain and suffering, the unavailability of punitive damages, and

8733-519: The defense of lack of privity of contract in cases where the plaintiff had not dealt directly with the manufacturer (as exemplified by Winterbottom v. Wright (1842)). During the Second Industrial Revolution of the mid-to-late 19th century, consumers increasingly became several steps removed from the original manufacturers of products and the unjust effects of all these doctrines became widely evident. State courts in

8856-509: The discovery of admissible evidence." American reported cases are replete with plaintiffs whose counsel artfully exploited this standard to obtain so-called " smoking gun " evidence of product defects and made defendants pay "a tremendous price" for their callous disregard for product safety. In response to these developments, a tort reform movement appeared in the 1980s which persuaded many state legislatures to enact various limitations like damage caps and statutes of repose . However,

8979-474: The doctrine, and the state legislature enacted a statute expressly banning strict liability for defective products in 1995. ) In a landmark 1986 decision, the U.S. Supreme Court also embraced strict liability for defective products by adopting it as part of federal admiralty law . In the conventional narrative, there are two main factors that explain the rapid embrace of Greenman and Section 402A. First, they came along just as Americans were coalescing around

9102-485: The earliest use of the word in English (in the spelling of risque from its French original, 'risque') as of 1621, and the spelling as risk from 1655. While including several other definitions, the OED 3rd edition defines risk as: (Exposure to) the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility. The Cambridge Advanced Learner's Dictionary gives

9225-422: The early First Industrial Revolution (due to increased mobility of both people and products), common law courts in both England and the United States in the 1840s erected further barriers to plaintiffs by requiring them to prove negligence on the part of the defendant (i.e., that the defendant was at fault because its conduct had failed to meet the standard of care expected of a reasonable person), and to overcome

9348-446: The economic value of losses such as lost profits or lost wages. The basic requirements of communal interests gave rise to risk sharing since the dawn of civilization. For example, people who lived their entire lives in a camp had the risk of fire, which would leave their band or family without shelter. After barter came into existence, more complex risks emerged and new forms of risk manifested. Merchants embarking on trade journeys bore

9471-438: The event of the borrower's death or infirmity. Alternatively, people sometimes lived too long from a financial perspective, exhausting their savings, if any, or becoming a burden on others in the extended family or society. In the ancient world there was not always room for the sick, suffering, disabled, aged, or the poor—these were often not part of the cultural consciousness of societies. Early methods of protection, aside from

9594-515: The exams. Also, many companies that employ actuaries have automatic pay raises or promotions when exams are passed. As a result, actuarial students have strong incentives for devoting adequate study time during off-work hours. A common rule of thumb for exam students is that, for the Society of Actuaries examinations, roughly 400 hours of study time are necessary for each four-hour exam. Thus, thousands of hours of study time should be anticipated over several years, assuming no failures. Historically,

9717-405: The explosion of mass tort product liability cases during the 1980s throughout the United States. In the federal judicial system , the number of product liability civil actions filed per year increased from 2,393 in 1975 to 13,408 in 1989, and product liability's percentage of all federal civil cases increased from 2.0% to 5.7% during the same period. These numbers reflect only a small portion of

9840-411: The formulation of corporate risk policy, and the setting up and running of corporate risk departments. Actuaries are also involved in other areas in the economic and financial field, such as analyzing securities offerings or market research . On both the life and casualty sides, the classical function of actuaries is to calculate premiums and reserves for insurance policies covering various risks. On

9963-546: The fund. Other early examples of mutual surety and assurance pacts can be traced back to various forms of fellowship within the Saxon clans of England and their Germanic forebears, and to Celtic society. Non-life insurance started as a hedge against loss of cargo during sea travel. Anecdotal reports of such guarantees occur in the writings of Demosthenes , who lived in the 4th century BCE. The earliest records of an official non-life insurance policy come from Sicily , where there

10086-604: The future. During the late 2010s, the comparative outcomes for consumers affected by the Volkswagen emissions scandal vividly highlighted the deficiencies of European civil procedure as applied to a defendant who had already publicly admitted to violations of U.S. environmental laws . In the United States, Volkswagen quickly settled the consolidated consumer class action and agreed to pay US$ 11.2 billion directly to consumers affected by its allegedly defective diesel vehicles. In contrast, consumers in Europe and elsewhere around

10209-582: The group that eventually became the Society for Equitable Assurances. It was he who specified that the chief official should be called an actuary . Previously, the use of the term had been restricted to an official who recorded the decisions, or acts , of ecclesiastical courts , in ancient times originally the secretary of the Roman senate , responsible for compiling the Acta Senatus . Other companies that did not originally use such mathematical and scientific methods most often failed or were forced to adopt

10332-601: The implementation of strategies proposed for mitigating potential risks, does not exceed the expected cost of those risks actualized. The steps needed to become an actuary , including education and licensing, are specific to a given country, with various additional requirements applied by regional administrative units; however, almost all processes impart universal principles of risk assessment, statistical analysis, and risk mitigation, involving rigorously structured training and examination schedules, taking many years to complete. The profession has consistently been ranked as one of

10455-414: The importance of different adverse effects in a particular situation. The Society for Risk Analysis concludes that "experience has shown that to agree on one unified set of definitions is not realistic". The solution is "to allow for different perspectives on fundamental concepts and make a distinction between overall qualitative definitions and their associated measurements." The understanding of risk,

10578-774: The insurance and reinsurance industries, either as staff employees or as consultants; to other businesses, including sponsors of pension plans; and to government agencies such as the Government Actuary's Department in the United Kingdom or the Social Security Administration in the United States of America. Actuaries assemble and analyze data to estimate the probability and likely cost of the occurrence of an event such as death, sickness, injury, disability, or loss of property. Actuaries also address financial questions, including those involving

10701-466: The international standard for risk management, describes a risk management process that consists of the following elements: Product liability Product liability is the area of law in which manufacturers , distributors , suppliers, retailers , and others who make products available to the public are held responsible for the injuries those products cause. Although the word "product" has broad connotations, product liability as an area of law

10824-1726: The level of pension contributions required to produce a certain retirement income and the way in which a company should invest resources to maximize its return on investments in light of potential risk. Using their broad knowledge, actuaries help design and price insurance policies, pension plans, and other financial strategies in a manner that will help ensure that the plans are maintained on a sound financial basis. Most traditional actuarial disciplines fall into two main categories: life and non-life. Life actuaries, which includes health and pension actuaries, primarily deal with mortality risk, morbidity risk, and investment risk. Products prominent in their work include life insurance , annuities , pensions, short and long term disability insurance , health insurance, health savings accounts , and long-term care insurance. In addition to these risks, social insurance programs are influenced by public opinion, politics, budget constraints, changing demographics , and other factors such as medical technology , inflation , and cost of living considerations. Non-life actuaries, also known as "property and casualty" (mainly US) or "general insurance" (mainly UK) actuaries, deal with both physical and legal risks that affect people or their property. Products prominent in their work include auto insurance , homeowners insurance , commercial property insurance, workers' compensation , malpractice insurance, product liability insurance , marine insurance , terrorism insurance , and other types of liability insurance . Actuaries are also called upon for their expertise in enterprise risk management . This can involve dynamic financial analysis , stress testing ,

10947-570: The liability for defective products repealed Council Directive 85/374/EEC and provided an expanded scope on product liability, now including components of products as well as software . The legislatures of many other countries outside the EU (then: EEC) subsequently enacted strict liability regimes based on the European model (that is, generally applying only to manufacturers and importers), including Israel (March 1980, based on an early proposed draft of

11070-444: The local environment. Finance is concerned with money management and acquiring funds. Financial risk arises from uncertainty about financial returns. It includes market risk , credit risk , liquidity risk and operational risk . In finance, risk is the possibility that the actual return on an investment will be different from its expected return. This includes not only " downside risk " (returns below expectations, including

11193-429: The logical implications of applying the rule to other types of product defects. Only in the late 1960s did Americans begin to draw a clear analytical distinction between manufacturing and design defects, and since the early 1980s, defective design claims "have formed the overwhelming bulk" of American product liability lawsuits. It was "the unintended application of [Section] 402A to the design context" which resulted in

11316-404: The loss of time or health may be an overwhelming misfortune to the person injured, and a needless one, for the risk of injury can be insured by the manufacturer and distributed among the public as a cost of doing business. It is to the public interest to discourage the marketing of products having defects that are a menace to the public. If such products nevertheless find their way into the market it

11439-425: The majority of states left untouched the basic rule of strict liability for defective products, and all efforts at the federal level to enact a uniform federal product liability regime were unsuccessful. From the mid-1960s onward, state courts struggled for over four decades to develop a coherent test for design defects, either phrased in terms of consumer expectations or whether risks outweigh benefits or both (i.e.,

11562-582: The manufacturer is best situated to afford such protection. Traynor's argument for imposing strict liability in Escola "has had an enormous impact on the way legal scholars have understood products liability and tort law more generally". The year after Greenman , the Supreme Court of California proceeded to extend strict liability to all parties involved in the manufacturing, distribution, and sale of defective products (including retailers). In 1969,

11685-469: The methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. Economics is concerned with the production, distribution and consumption of goods and services. Economic risk arises from uncertainty about economic outcomes. For example, economic risk may be the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment or

11808-418: The methods pioneered by Equitable. In the 18th and 19th centuries, computational complexity was limited to manual calculations. The calculations required to compute fair insurance premiums can be burdensome. The actuaries of that time developed methods to construct easily used tables, using arithmetical short-cuts called commutation functions , to facilitate timely, accurate, manual calculations of premiums. In

11931-527: The mid-19th century, professional bodies were founded to support and further both actuaries and actuarial science, and to protect the public interest by ensuring competency and ethical standards. Since calculations were cumbersome, actuarial shortcuts were commonplace. Non-life actuaries followed in the footsteps of their life compatriots in the early 20th century. In the United States, the 1920 revision to workers' compensation rates took over two months of around-the-clock work by day and night teams of actuaries. In

12054-399: The most desirable. Actuaries work comparatively reasonable hours, in comfortable conditions, without the need for physical exertion that may lead to injury, are well paid, and the profession consistently has a good hiring outlook. Not only has the overall profession ranked highly, but it also is considered one of the best professions for women, and one of the best recession-proof professions. In

12177-411: The most desirable. In various studies in the United States, being an actuary was ranked first or second multiple times since 2010, and in the top 20 for most of the past decade. Actuaries use skills primarily in mathematics, particularly calculus -based probability and mathematical statistics , but also economics , computer science , finance, and business. For this reason, actuaries are essential to

12300-525: The normal support of the extended family, involved charity; religious organizations or neighbors would collect for the destitute and needy. By the middle of the 3rd century, charitable operations in Rome supported 1,500 suffering people. Charitable protection remains an active form of support in the modern era, but receiving charity is uncertain and often accompanied by social stigma . Elementary mutual aid agreements and pensions did arise in antiquity. Early in

12423-420: The plaintiff merely needs to prove: In addition to common law remedies, many states have enacted consumer protection statutes that provide specific remedies for certain specific types of product defects. One reason for the appearance of such statutes is that under the "economic loss rule", strict liability in tort is unavailable for products that cause damage only to themselves. In other words, strict liability

12546-461: The plaintiff obtains a court order. Civil law countries strongly dislike and oppose the American principle of broad discovery in civil litigation. For example, since 1968, it has been a crime for a French company to produce commercial information in foreign legal proceedings without express authorization from a French court, and in turn, this has been raised as a defense to discovery by French defendants in American product liability cases. Since

12669-425: The possibility of losing some or all of the original investment) but also "upside risk" (returns that exceed expectations). In Knight's definition, risk is often defined as quantifiable uncertainty about gains and losses. This contrasts with Knightian uncertainty , which cannot be quantified. Financial risk modeling determines the aggregate risk in a financial portfolio. Modern portfolio theory measures risk using

12792-440: The potential that an audit report may fail to detect material misstatement either due to error or fraud. Health risks arise from disease and other biological hazards . Epidemiology is the study and analysis of the distribution, patterns and determinants of health and disease. It is a cornerstone of public health , and shapes policy decisions by identifying risk factors for disease and targets for preventive healthcare . In

12915-457: The privity bar to recovery in negligence actions. By 1955, James was citing MacPherson to argue that "[t]he citadel of privity has crumbled," although Maine, the last holdout, would not adopt MacPherson until 1982. The second step was the landmark New Jersey case of Henningsen v. Bloomfield Motors, Inc. (1960), which demolished the privity bar to recovery in actions for breach of implied warranty. Prosser cited Henningsen in 1960 as

13038-423: The procedural law of the forum state is actually able to facilitate access to justice. Traditionally, European courts have provided no discovery or rather minimal discovery (by American standards). Where available, European discovery is rarely self-executing (that is, automatically effective by operation of law), meaning that the defendant and third parties have no obligation to disclose anything unless and until

13161-546: The prominence of the subject in the eyes of the general public and legal practitioners." This was still true as of 2015: "In the United States, product liability continues to play a big role: litigation is much more frequent there than anywhere else in the world, awards are higher, and publicity is significant." In the United States, the majority of product liability laws are determined at the state level and vary widely from state to state. Each type of product liability claim requires proof of different elements in order to present

13284-546: The quality of the candidates sitting the examination and in particular how well prepared they are. Fitness to pass is the criterion, not whether you can achieve a mark in the top 40% of candidates sitting." In 2000, the Casualty Actuarial Society (CAS) decided to start releasing pass marks for the exams it offers. The CAS's policy is also not to grade to specific pass ratios; the CAS board affirmed in 2001 that "the CAS shall use no predetermined pass ratio as

13407-508: The rationale and doctrine of [Section] 402A." Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes between three major types of product liability claims: However, in most states, these are not legal claims in and of themselves, but are pleaded in terms of the legal theories mentioned above. For example, a plaintiff might plead negligent failure to warn or strict liability for defective design. The three types of product liability claims are defined as follows: In

13530-480: The rise of attorneys specializing exclusively in plaintiffs' personal injury cases and their professional associations like the organization now known as the American Association for Justice ; (4) the ubiquity of so-called "bottle cases" (personal injury cases arising from broken glass bottles ) before aluminum cans and plastic bottles displaced glass bottles as the primary beverage container during

13653-422: The risk of losing goods entrusted to them, their own possessions, or even their lives. Intermediaries developed to warehouse and trade goods, which exposed them to financial risk . The primary providers in extended families or households ran the risk of premature death, disability or infirmity, which could leave their dependents to starve. Credit procurement was difficult if the creditor worried about repayment in

13776-545: The same defect. This embarrassed Germany into dropping its longstanding opposition to European collective redress proposals, and the country also made reforms to its domestic civil procedure. As a result, on 25 November 2020, the European Parliament and Council adopted the Directive on Representative Actions. Paragraph 1 of Article 1 of the Directive states that it is intended "to improve consumers' access to justice." In 2024, Directive (EU) 2024/2853 on

13899-414: The scope of the duty of care was limited to those with whom one was in privity. Later cases like MacPherson v. Buick Motor Co. broadened the duty of care to all who could be foreseeably injured by one's conduct. Over time, negligence concepts have arisen to deal with certain specific situations, including negligence per se (using a manufacturer's violation of a law or regulation, in place of proof of

14022-492: The simple question of whether it was part of a business enterprise responsible for inflicting injuries on human beings. The theoretical foundation for enterprise liability had been laid by James as well as another law professor, Leon Green . As noted above, it was Greenman which led to the actual emergence of product liability as a distinct field of private law in its own right. Before this point, products had appeared in case law and scholarly literature only in connection with

14145-422: The term to negative impacts ("downside risks"), while others also include positive impacts ("upside risks"). Some resolve these differences by arguing that the definition of risk is subjective. For example: No definition is advanced as the correct one, because there is no one definition that is suitable for all problems. Rather, the choice of definition is a political one, expressing someone's views regarding

14268-518: The unavailability (before the 2010s) of class actions. As of 2003, there was no country outside of the United States where plaintiffs were able to recover noneconomic damages above US$ 300,000 for even the most catastrophic injuries. As of 2015, product liability in Europe "has remained a fairly minor field which generates fewer cases, more modest awards, and rarely makes it into the headlines" (in comparison to its American cousin). In July 2018, European Commission staff reported that from 2000 to 2016,

14391-423: The uncontrolled release of radiation or a toxic chemical may have immediate short-term safety consequences, more protracted health impacts, and much longer-term environmental impacts . Events such as Chernobyl , for example, caused immediate deaths, and in the longer term, deaths from cancers, and left a lasting environmental impact leading to birth defects , impacts on wildlife, etc. Information technology (IT)

14514-410: The world follows one of these two models." The United States was the birthplace of modern product liability law during the 20th century, due to the 1963 Greenman decision which led to the emergence of product liability as a distinct field of private law. In 1993, it was reported that "[n]o other country can match the United States for the number and diversity of its product liability cases, nor for

14637-452: The world had to fight much longer and harder for less compensation. Many of them were unimpressed with Volkswagen's vigorous advocacy of legal defenses based on technical differences between different nations' environmental laws; from their perspective, they had paid for a "clean diesel" car, they did not get a "clean diesel" car, and did not understand why they deserved far less compensation than American consumers for what they perceived to be

14760-481: The world within the past two decades to become a "global phenomenon," and therefore, "the United States is no longer the only country with tough product liability rules." On the other hand, the picture looked very different when one "turn[ed] from the law on the books to the law in action." In the real world, the actual protection afforded to consumers by product liability law "depends heavily on whether claims are realistically enforceable," and that depends upon whether

14883-399: Was demolished in the landmark Henningsen case. Breach of warranty-based product liability claims usually focus on one of three types: Express warranty claims focus on express statements by the manufacturer or the seller concerning the product (e.g., "This chainsaw is useful to cut turkeys"). The various implied warranties cover those expectations common to all products (e.g., that a tool

15006-452: Was probably what modern observers would call no-fault or strict liability. In other words, the plaintiff only needed to prove causation and damages. Common law courts began to shift towards a no-liability regime for products (except for cases of fraud or breach of express warranty) by developing the doctrine of caveat emptor (buyer beware) in the early 1600s. As personal injury and product liability claims began to slowly increase during

15129-534: Was signed by Austria, Belgium, France and Luxembourg, it was ratified by none of them. On July 25, 1985, the then- European Economic Community adopted the Product Liability Directive . In language resembling what Traynor wrote in Escola and Greenman , the Directive's preface states that "liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of

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