A Practical Guide to Risk Management by Thomas S. Coleman
Managing risk is at the core of managing any financial organization. Risk measurement and quantitative tools are critical aids for supporting risk management, but quantitative tools alone are no substitute for judgment, wisdom, and knowledge. Managers within a financial organization must be, before anything else, risk managers in the true sense of managing the risks that the firm faces
Thomas S. Coleman's book, A Practical Guide to Risk Management, is a thoughtful, engaging work that board members and senior managers, in particular, will find most instructive. Coleman argues that, while risk measurement is a specialized technical discipline that should often be housed in a separate department, risk management is the responsibility of the board, the CEO, and every line manager in the firm. One chapter presents fundamental concepts of risk management, including a lucid explanation of frequency-based and belief-based probability.
Another, devoted to managing risk, incorporates a superb essay comparing a firm's financial exposures to small-group ski mountaineering in avalanche country. The author also surveys historic trading losses and comments on specific cases of fraud and "normal business activity gone wrong." In addition, there is a full-length primer on measuring risk and a brief consideration of the uses and limitations of quantitative techniques. Valuable for motivated generalists and experienced risk professionals alike, Coleman's work fully meets the standards of excellence in writing and editing we have come to expect from the Research Foundation of CFA Institute.
Written by a 'hands-on' & obviously very experienced manager of risk, this is an excellent introduction to the subject, and all the better for the fact it is free!!
