Summary of The Failure of Risk Management
Why It’s Broken and How to Fix It
The problem isn’t measuring risk; the problem lies in using the right tools.
As capitalist economies careen from one crisis to the next, it’s tempting to believe that risk management is some sort of dark art. Risk consultant Douglas W. Hubbard agrees that the economic collapse of 2008 stained his entire industry. But, he argues persuasively, the problem isn’t that risk-management tools don’t exist or don’t work; the problem is that people too rarely use effective tools. Combining plenty of real-world examples and a clear writing style, Hubbard creates an accessible user’s guide to risk management. To his credit, he doesn’t puff up his own formulation, mentioning it as one of several Monte Carlo approaches. He lays out a strategy that’s easy to follow: Start by adopting a skeptical mind-set, invest in some software, then devote time and energy to gauging the chances that “something bad could happen.” getAbstract recommends his instructive manual to executives and investors seeking insight about managing risk.
In this summary, you will learn
- How firms approach risk management
- Why so many risk-management practices are flawed
- How to improve risk management in your organization
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