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Product details
File Size: 2967 KB
Print Length: 304 pages
Publisher: Wiley; 1 edition (April 6, 2009)
Publication Date: April 6, 2009
Sold by: Amazon Digital Services LLC
Language: English
ASIN: B0026LTMAU
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This is a very handy work on risk management. Douglas Hubbard, the author, takes the "field" of risk management to task for many practitioners simply not having a clue and doing a disservice to their organizations. He emphasizes quantification and abhors the "soft" risk management practices that are all-too-common. His introductory lament sets the book's tone (Page xi): "Unfortunately, risk management based on actual measurements of risks is not the predominant approach in most industries." More directly (Page xii): ". . .much of what has been done in risk management, when measured objectively, has added no value to the issue of managing risk. It may actually have made things worse."Parts I and II lay out the nature of the "crisis" and why this sad state of affairs has occurred. Part I notes that many weak methods have been adopted, not providing much assistance to organizations. In Part II, he notes the four major approaches to risk management (what he terms the "Four Horsemen)": (a) actuaries focus is on assessing and managing risk in insurance and pensions); (b) War Quants (use probabilistic risk analysis, decision, analysis, and operations research); (c) economists management of risk in portfolios); (d) management consultants (tendency to be more intuitive, relying on individual experience--an approach he likens to "snake oil" (page 71). His preference is the use of quantitative approaches and an understanding of uncertainty and probability. In the process, he emphasizes the work of those scholars following in the footsteps of psychologists Amos Tversky and Daniel Kahneman (whose works I have reviewed elsewhere), who point out the inherent biases in "intuitive" approaches. In the process, he takes some well deserved shots at the approach of Nassim Nicholas Taleb, well known for his work "The Black Swan."Part III addresses "Howe to fix it." Here, Hubbard goes through approaches and techniques that he views as legitimate and actually contributing to risk management. In a generally readable analysis, he indicates to readers how risk management ought to be carried out.All in all, a useful volume. I appreciate the critique of the "soft" approaches to risk management. For those involved in security and risk analysis, this would be a useful volume.
When I attended a course on risk management for my masters degree in engineering management, I was very disappointed with the prescribed book. It contained very shallow principles on risk management and an overview of some approaches. It did not really equip me as a manager to know the history of risk management (how it developed and why); and where it is heading to. It also did not tell me the strengths and weaknesses of risk management models and approaches.previously I have read "how to measure anything" from Hubbard and thought that a book about measurement taught me more about risk management than risk management books. Then I read this one that put everything together in a single book. Hubbard can be "evangelistic" in promoting his approach, but he provides an exceptional overview of the risk management landscape and how it evolved over the years. He also puts his head on a block and probably offends many authors in calling the weaknesses to their approaches to risk management (and in some cases he even demonstrates the weaknesses with research findings or examples). He goes further by providing recommendations on how risk management could be tackled.I highly recommend this book for people interested in tackling risk management, or just wanting a general overview of risk management.I should warn that he is very single minded in promoting quantitative risk modelling, which is not suitable to complex domain issues (see the Cynefin framework). But what I do take home with me is that we are able more often to perform quantitative risk modelling than we think we can. And it is a superior way of managing risk when compared to qualitative methods (such as the infamous risk matrices)
This is a decent introduction to quantitative risk assessment. Unfortunately, like many risk "management" books, it focuses 95% of its energy on risk assessment and 5% on risk mitigation (in this case, about 1/2 of Chapter 2). Perhaps changing the title to "Failure of Risk Assessment" would be more fitting.I find myself about where I was when I finished reading the author's other book (How to Measure Anything): sold on the concept of measuring risks, but completely lost about what to do when I've completed the measurement. If you have already read that book, the value proposition of this book is less clear. If you haven't read that book, go do so immediately.
A thorough assessment of current risk assessment methods and their shortcomings. Hubbard takes the reader through some historic events that showcase shortcomings in different fields in regards to risk management. Rooting his points in both case studies and citations to a multitude of other research, Hubbard provides reasoning for the found flaws in how risk is handled today. A favorite component for all of Hubbard's work has always been the vast amount of background research, there is never a shortage of avenues for readers to look for further information. After providing this relatively comprehensive debunking of many widely used techniques, Hubbard offers some solutions involving a larger reliance on quantitative methods and the scientifically proven method of estimation calibration training.
I purchased this book thinking it would be half why risk management is broken and half how to fix it. Instead, the author spends nearly all of the book explaining in mostly non-mathematical terms, why he is smarter than everyone else. There are multiple vignettes about how the author shut down a supposed expert in a public venue and everyone clapped.This book does a good job explaining why most businesses have poor risk management programs (because they aren't filled with statisticians). This book does a poor job offering any structured methodology for creating a successful risk management program.
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