Constructing risk objects and their controllability in the insurance industry

Bednarek, Rebecca and Chalkias, Konstantinos (2016) Constructing risk objects and their controllability in the insurance industry. Academy of Management Proceedings , pp. 1-40. ISSN 0065-0668.

Abstract

This study examines the interrelationship between the social construction of a risk object and the associated means of controlling it within organizations. Drawing on data from 35 insurance organizations, we develop a framework that theorizes how organizations construct risk objects along different dimensions of proximity/distance and tangibility/abstraction, which shapes and is shaped by how they construct their ability to control those risk objects as a matter of protection or capital efficiency. We show that organizations vary in these constructions of risk, developing three categories of Risk Protector, Risk Optimizer and Risk Jugglers. We explain this variation and offer an expanded conceptualization of the construction of the risk object and its controllability through three explanatory organizational features of centralizing, modelling and diversifying. Our findings are drawn together into a conceptual framework that illuminates two pathways that organizations follow in constructing and controlling risk: coherent pathways (with consistent either/or choices) or composite pathways (individual both/and approaches). In doing so, we theoretically extend the notion of the risk object within organizational studies and provide a platform for additional studies into this important but nascent area of organizational research.

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