Details

The Failure of Risk Management


The Failure of Risk Management

Why It's Broken and How to Fix It
1. Aufl.

von: Douglas W. Hubbard

32,99 €

Verlag: Wiley
Format: EPUB
Veröffentl.: 06.04.2009
ISBN/EAN: 9780470483442
Sprache: englisch
Anzahl Seiten: 304

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Beschreibungen

<b>An essential guide to the calibrated risk analysis approach</b> <p><b><i>The Failure of Risk Management</i></b> takes a close look at misused and misapplied basic analysis methods and shows how some of the most popular "risk management" methods are no better than astrology! Using examples from the 2008 credit crisis, natural disasters, outsourcing to China, engineering disasters, and more, Hubbard reveals critical flaws in risk management methods–and shows how all of these problems can be fixed. The solutions involve combinations of scientifically proven and frequently used methods from nuclear power, exploratory oil, and other areas of business and government. Finally, Hubbard explains how new forms of collaboration across all industries and government can improve risk management in every field.</p> <p><b>Douglas W. Hubbard</b> (Glen Ellyn, IL) is the inventor of Applied Information Economics (AIE) and the author of Wiley's <i>How to Measure Anything: Finding the Value of Intangibles in Business</i> (978-0-470-11012-6), the #1 bestseller in business math on Amazon. He has applied innovative risk assessment and risk management methods in government and corporations since 1994.</p> <p>"Doug Hubbard, a recognized expert among experts in the field of risk management, covers the entire spectrum of risk management in this invaluable guide. There are specific value-added take aways in each chapter that are sure to enrich all readers including IT, business management, students, and academics alike"<br /> <b>—Peter Julian</b>, former chief-information officer of the New York Metro Transit Authority. President of Alliance Group consulting</p> <p>"In his trademark style, Doug asks the tough questions on risk management. A must-read not only for analysts, but also for the executive who is making critical business decisions."<br /> <b>—Jim Franklin</b>, VP Enterprise Performance Management and General Manager, Crystal Ball Global Business Unit, Oracle Corporation.</p>
<p>Preface xi</p> <p>Acknowledgments xv</p> <p><b>Part One An Introduction To The Crisis 1</b></p> <p><b>Chapter</b> <b>1 Healthy Skepticism for Risk Management 3</b></p> <p>Common Mode Failure 4</p> <p>What Counts as Risk Management 8</p> <p>Anecdote: The Risk of Outsourcing Drug Manufacturing 11</p> <p>What Failure Means 16</p> <p>Scope and Objectives of This Book 18</p> <p><b>Chapter</b> <b>2 Risk Management: A Very Short Introduction to Where We've Been and Where (We Think) We Are 21</b></p> <p>The Entire History of Risk Management (in 800 Words or Less) 22</p> <p>Methods of Assessing Risks 24</p> <p>Risk Mitigation 26</p> <p>The State of Risk Management According to Surveys 31</p> <p><b>Chapter</b> <b>3 How Do We Know What Works? 37</b></p> <p>An Assessment of Self-Assessments 37</p> <p>Potential Objective Evaluations of Risk Management 42</p> <p>What We May Find 49</p> <p><b>Part Two Why It's Broken 53</b></p> <p><b>Chapter</b> <b>4 The “Four Horsemen” of Risk Management: Some (Mostly) Sincere Attempts to Prevent an Apocalypse 55</b></p> <p>Actuaries 57</p> <p>War Quants: How World War II Changed Risk Analysis Forever 59</p> <p>Economists 63</p> <p>Management Consulting: How a Power Tie and a Good Pitch Changed Risk Management 68</p> <p>Comparing the Horsemen 74</p> <p>Major Risk Management Problems to Be Addressed 76</p> <p><b>Chapter</b> <b>5 An Ivory Tower of Babel: Fixing the Confusion about Risk 79</b></p> <p>The Frank Knight Definition 81</p> <p>Risk as Volatility 84</p> <p>A Construction Engineering Definition 86</p> <p>Risk as Expected Loss 86</p> <p>Risk as a Good Thing 88</p> <p>Risk Analysis and Risk Management versus Decision Analysis 90</p> <p>Enriching the Lexicon 91</p> <p><b>Chapter</b> <b>6 The Limits of Expert Knowledge: Why We Don't Know What We Think We Know about Uncertainty 95</b></p> <p>The Right Stuff: How a Group of Psychologists Saved Risk Analysis 97</p> <p>Mental Math: Why We Shouldn't Trust the Numbers in Our Heads 99</p> <p>“Catastrophic” Overconfidence 102</p> <p>The Mind of “Aces”: Possible Causes and Consequences of Overconfidence 107</p> <p>Inconsistencies and Artifacts: What Shouldn't Matter Does 111</p> <p>Answers to Calibration Tests 115</p> <p><b>Chapter</b> <b>7 Worse Than Useless: The Most Popular Risk Assessment Method and Why It Doesn't Work 117</b></p> <p>A Basic Course in Scoring Methods (Actually, It's the Advanced Course, Too—There's Not Much to Know) 118</p> <p>Does That Come in “Medium”?: Why Ambiguity Does Not Offset Uncertainty 123</p> <p>Unintended Effects of Scales: What You Don't Know Can Hurt You 130</p> <p>Clarification of Scores and Preferences: Different but Similar-Sounding Methods and Similar but Different-Sounding Methods 135</p> <p><b>Chapter</b> <b>8 Black Swans, Red Herrings, and Invisible Dragons: Overcoming Conceptual Obstacles to Improved Risk Management 145</b></p> <p>Risk and Righteous Indignation: The Belief that Quantitative Risk Analysis is Impossible 146</p> <p>A Note about Black Swans 151</p> <p>Frequentist versus Subjectivist 158</p> <p>We're Special: The Belief that Risk Analysis Might Work, But Not Here 161</p> <p><b>Chapter</b> <b>9 Where Even the Quants Go Wrong: Common and Fundamental Errors in Quantitative Models 167</b></p> <p>Introduction to Monte Carlo Concepts 168</p> <p>Survey of Monte Carlo Users 172</p> <p>The Risk Paradox 174</p> <p>The Measurement Inversion 176</p> <p>Where's the Science? The Lack of Empiricism in Risk Models 178</p> <p>Financial Models and the Shape of Disaster: Why Normal Isn't so Normal 181</p> <p>Following Your Inner Cow: The Problem with Correlations 187</p> <p>“That's Too Uncertain”: How Modelers Justify Excluding the Biggest Risks 191</p> <p>Is Monte Carlo Too Complicated? 195</p> <p><b>Part Three How to Fix It 199</b></p> <p><b>Chapter</b> <b>10 The Language of Uncertain Systems: The First Step Toward Improved Risk Management 201</b></p> <p>Getting Your Probabilities Calibrated 203</p> <p>The Model of Uncertainty: Decomposing Risk with Monte Carlos 208</p> <p>Decomposing Probabilities: Thinking about Chance the Way You Think about a Budget 212</p> <p>A Few Modeling Principles 213</p> <p>Modeling the Mechanism 215</p> <p><b>Chapter</b> <b>11 The Outward-Looking Modeler: Adding Empirical Science to Risk 221</b></p> <p>Why Your Model Won't Behave 223</p> <p>Empirical Inputs 224</p> <p>Introduction to Bayes: One Way to Get around that “Limited Data for Disasters” Problem 227</p> <p>Self-Examinations for Modelers Who Care about Quality 233</p> <p><b>Chapter</b> <b>12 The Risk Community: Intra- and Extraorganizational Issues of Risk Management 241</b></p> <p>Getting Organized 242</p> <p>Managing the Global Probability Model 244</p> <p>Incentives for a Calibrated Culture 250</p> <p>Extraorganizational Issues: Solutions beyond Your Office Building 254</p> <p>Miscellaneous Topics 256</p> <p>Final Thoughts on Quantitative Models and Better Decisions 258</p> <p>Appendix Calibration Tests and Answers 261</p> <p>Index 273</p>
"…shows how to identify and fix hidden problems in risk management. He uses real world examples to reveal serious problems in common quantitative and qualitiative approaches to risk analysis." (<i>Book News</i>, August 2009)
<b>Douglas W. Hubbard</b> is the inventor of Applied Information Economics (AIE). He is an internationally recognized expert in the field of measuring intangibles, risks, and value, especially in IT value, and is a popular speaker at numerous conferences. He has written articles for <i>InformationWeek</i>, <i>CIO Enterprise</i>, and <i>DBMS</i> magazine. His AIE method has been applied to dozens of large Fortune 500 IT investments, military logistics, venture capital, aerospace, and environmental issues. Doug is the author of <i>How to Measure Anything: Finding the Value of Intangibles in Business</i> (Wiley).
<i>The Failure of Risk Management</i> explains which risk analysis methods work, which don't, and how to tell the difference. <i>The Failure of Risk Management</i> discusses topics relevant to the management of any risk including: Financial Risks, Natural Disasters, Industrial Accidents, Product Safety, Technology Risks, Project Failures, Engineering Disasters, Pandemic Viruses, Computer Security, Fraud, Loss of Reputation, Litigation <p><b>Companion Web site www.howtofixriskmgt.com</b></p> <p><b>YOUR BIGGEST RISK IS THAT YOUR RISK MANAGEMENT METHODS PROBABLY DON'T WORK.</b></p> <p><b>THE FAILURE OF RISK MANAGEMENT</b></p> <p>"Doug Hubbard, a recognized expert among experts in the field of risk management, covers the entire spectrum of risk management in this invaluable guide. There are specific value-added take aways in each chapter that are sure to enrich all readers including IT, business management, students, and academic alike."<br /> —<b>Peter Julian</b>, <b>former chief information officer of the New York Metro Transit Authority, President of The Alliance Group Consulting</b></p> <p>"In his, trademark style, Doug asks the tough questions on risk management. A must-read not only for analysts, but also for the executive who is making critical business decisions."<br /> <b>—Jim Franklin, VP Enterprise Performance Management and General Manager, Crystal Ball Global Business Unit, Oracle Corporation</b></p> <p>"Doug Hubbard's book should be required reading for managers and practitioners responsible for mitigating risk. If corporations and government are to regain the public trust, effective and broad-based risk management must be as natural as breathing."<br /> <b>—Ron Miller, FEMA CIO 2001-2002; former senior advisor, White House Homeland Security Transition Planning Office; Chairman, TeamRonMiller.com</b></p> <p>"A seminal and timely book. <i>The Failure of Risk Management</i> challenges conventional wisdom and provides priceless support to decision makers navigating their company in these turbulent times."<br /> <b>—Dr. John F.A. Spangenberg, CEO, SeaQuation (an ING spin-off)</b></p> <p>"Doug Hubbard really knows his stuff. He is not just an author who has learned enough about a current popular topic to write a book, but instead is a talented consultant in this area, who has learned how to write, and write well. He displays a deep real-world understanding that ranges from mathematics to everyday human behavior, a trait that is all too rare in this age of specialization."<br /> <b>—Prof. Sam Savage, Fellow, Judge Business School, Cambridge University; Consulting Professor, Stanford University School of Engineering</b></p>

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