The Fundamental Rules of Risk Management

(CRC Press, Boca Raton, FL) -- 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, by Nigel Da Costa Lewis (CRC Press, 2012), 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, 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, 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.

Through examples and case studies, this thought-provoking book shows how the rules of risk can work to protect and enhance investor value.

Features

• Illustrates how the rules of risk management can help you avoid disabling financial loss
• Explains why “unreason” is the more evil twin brother of greed
• Describes what leads people to make disastrous investment decisions
• Shows how high intelligence can trick you into catastrophic losses
• Presents notable lessons learned to keep your investments safe
• Includes exercises and references at the end of each chapter

Contents

Section I: The Behavioral Foundations of Risk Management
Unreason Is the Even Eviler Twin Brother of Greed
The Maleficent Hand of the Men in Gray Suits
The Unpalatable Truth about Risk Management

Section II: What You Need to Know, but Nobody Wants to Tell You
What the Textbooks Will Not Tell You about Corporate Governance
The Most Important Lesson a Risk Manager Must Know
A Powerful Secret from Henry Fayol
The Incredible Advantage of a Monocle on Risk
Benefit from the Fable of Spreadsheet City
How to Guarantee Success by Understanding the Nature of Failure
Snake Oil Salesmen, Goat Gonads, and Value at Risk

About Nigel Da Costa Lewis

Nigel Da Costa Lewis is a speaker, writer, and researcher on the uncertainty, risk, and irrational bias found in investing. Lewis has written four books as well as numerous articles in international publications, such as the Journal of Investing, Journal of Wealth Management, and Pensions. He earned four master’s degrees from the University of London and a Ph.D. from the University of Cambridge. His current research focuses on asset allocation, impact of fees on retirement savings, maximization of retirement accounts, new forms of diversification, life-cycle investing, intelligent portfolio optimization, and post-retirement optimal asset allocation. Visit www.nigeldlewis.com for more information.

About The Author