The consequences of taking on risk can be ruinous to personal finances, professional careers, corporate survivability, and even nation states. Yet many risk managers do not have a clear understanding of the basics. Requiring no statistical or mathematical background, The Fundamental Rules of Risk Management gives you the knowledge to successfully handle risk in your organization.
The book begins with a deep investigation into the behavioral roots of risk. Using both historical and contemporary contexts, author Nigel Da Costa Lewis carefully details the indisputable truths surrounding many of the behavioral biases that induce risk. He exposes the fallacy of the wisdom of experts, explains why you cannot rely on regulators, outlines the characteristics of the "glad game," and demonstrates how high intelligence or lack thereof can lead to loss of hard-earned wealth. He also discusses the weaknesses and failures of modern risk management.
Moving on to elements often overlooked by risk managers, Dr. Lewis traces the link between corporate governance and risk management. He then covers core lessons surrounding the role of risk managers as well as the difficult subject of integrated, single lens analysis of risk. The book also explores aspects of spreadsheet risk and draws on lessons learned in the information systems and software engineering communities to provide guidance on selecting the right risk management system. It concludes with a discussion on the most dominant of risk measures-value at risk.
Having a clear understanding about risk separates successful professionals, companies, and economies from history's forgotten failures. Through examples and case studies, this thought-provoking book shows how the rules of risk can work to protect and enhance investor value.
Section I: The Behavioral Foundations of Risk Management Unreason Is the Even Eviler Twin Brother of Greed A Word to the Wise--You Cannot Rely on the Flynn Effect The Unintended Consequences of the Glad Game But You Have to Remember Ivar Kreuger of Kalmar! The Maleficent Hand of the Men in Gray Suits Unreason Abounds in Places Where It Must Not The Conspiratorial Regulator The Apathetic Regulator The Unpalatable Truth about Risk Management A Rather Vulgar, But Common, Perception of Risk Management The Emperor of Risk, His Lyre, and the Palatine The Utter and Total Redundancy of Financial Risk Management The Risk Manager as a "Quivering Dastard" Perception and Reality about Risk Management For Further Thought Additional Resources Appendix Section II: What You Need to Know, but Nobody Wants to Tell You What the Textbooks Will Not Tell You about Corporate Governance The Essence of the Governance Issue The Superficiality of Compliance Why "Gentleman's" Agreements Do Not Work The Role of Criminal Penalty The Benefit of Wolf Pack Capitalism The Inherent Ethos of Risk Management The Cost of Corporate Governance Why Governance Failures Are Inevitable For Further Thought Additional Resources The Most Important Lesson a Risk Manager Must Know Odysseus and the Sirens' Song The Consequence of Ignoring the Golden Rule An Immutable Condition for Success in Risk Management For Further Thought Additional Resources A Powerful Secret from Henry Fayol The Great Work: General and Industrial Management The Rise of Fayol's "Strategic Security Director" The Warren Buffet Principle of Risk Management Can Chief Risk Officers Add Value? For Further Thought Additional Resources The Incredible Advantage of a Monocle on Risk What Is a Monocle on Risk? The Hidden Dangers of Risk Management Silos The Need for Better Risk Management The Challenge The Three Essential Elements of Successful Risk Integration For Further Thought Additional Resources Benefit from the Fable of Spreadsheet City Don't Be a Victim of Spreadsheet Hell Why Spreadsheet Failure Costs Big Time! How to Bring Spreadsheet Risk under Control Understanding the Nature of Spreadsheet Error The Principles of Spreadsheet Engineering The Potential of Compilable Spreadsheets Seven Rules for Superior Spreadsheet Design How to Minimize Risk through Formal Testing For Further Thought Additional Resources How to Guarantee Success by Understanding the Nature of Failure The Value Added of Vendor Risk Information Systems How to Guarantee Success by Understanding the Nature of Failure Developing a Winning Game Plan Creating a High Performance Team The Important Lesson of 1/2 A - n A - (n ae' 1) The Critical Role of Executive Buy-In Clarifying Your Requirements The Truth about Project Managers For Further Thought Additional Resources Snake Oil Salesmen, Goat Gonads, and Value at Risk VaR Explained The Joyous Exclamation of Simons The Tipping Point What the Rocket Scientists May Not Tell You, But You Need to Know For Further Thought Additional Resources Index Notes appear at the end of each chapter.