The Essentials of Risk Management

The Associate Professional Risk Manager (PRM) is a new PRMIA certificate program intended for staff entering the risk management profession, or those who interface with risk management disciplines on a regular basis, such as auditing, accounting, legal, and systems development personnel who want to understand fundamental risk management methods and practices. Designed to be mathematically and theoretically less detailed than the Professional Risk Manager (PRM(tm)) certification, the new program will cover the core concepts allowing non-specialists to interpret risk management information and reports, make critical assessments and evaluate the implications and the limitations of such results.

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All Customer Reviews
Average Customer Review:
0 of 1 people found the following review helpful:

Covers all the basics, 2009-11-29
This book does cover all the basics one needs to know about Risk Management. It explains concepts step by step so that we can understand even things we thought we already knew.
From here on, one feels more confident to adventure towards more difficult subjects in the matter and finance. I can recommend this book.


0 of 1 people found the following review helpful:

Good if your in banking or financial management, 2009-06-16
The book was over my head since I am not in banking or the financial industry. I actually was looking for a book on business risk management, oops wrong book.
The first few chapters were relevant for a business person but after that I just didn't think it was worth continuing.
Probably a 5 Star book, but I gave it four because of my mistake-Is that fair?????????


3 of 3 people found the following review helpful:

Accessible introduction, sometimes imprecise, 2009-02-04
This is a broad, gentle introduction to risk. As it means to be non-technical, it is stronger as a discussion of qualitative issues like governance and weaker as an introduction to deep topics like Basel II and value at risk (VaR).

What I like about this book

It succeeds in putting risk measurement in perspective, from 10,000 feet. Chapter 1 nicely summarizes why risk measures are helpful and "dangerous." In this respect, the authors actually go further than Taleb's Black Swan by hinting at solutions. Taleb basically says we necessarily abuse models (my paraphrase of his entire book). We can all stipulate to that. The relevant question is, knowing our risk models do not describe natural phenomena, what do we do about it: how do we improve them and, a different question, what is their proper use (e.g., support, situation, context)? It's hard to find good study on model risk but this book touches on it quite a bit. In a way, i think the book's strength is as a primer on model risk.

Chapter 4 is helpful on risk governance, including roles (risk advisory director). The credit crisis, like some before, has re-surfaced the importance of governance.

It is a very accessible scan of various risk topics. The authors boiled down their formidable research on risk adjusted return on capital (RAROC) into a quick review. Great intro to economic capital and OpRisk VaR. Basel II is summarized into the smallest space I've seen.

What I don't like

Bending over backwards to be non-technical can lead to confusion. The central limit theorem (CLT), being slightly misstated, is given too much application (i.e., it speaks to properties of a sample mean under unrealistic assumptions, generally not an obsession of the risk manager who is concerned with tail outcomes).

Value at risk (VaR) is divided into three approaches. That's typical, but the review of the "analytic approach" propagates a common misunderstanding: it implies that the distributional assumption must be normal (e.g., a drawback of analytic approach is "assumes normality"). But of course extensions to parametric (linear) VaR models, that address skew and/or heavy-tails, are available.



0 of 2 people found the following review helpful:

Review, 2008-12-20
I hold a Masters Degree in security management and am pursuing certification as a risk management professional. This book was recommended by a specialized major trade association. At this oint, I'm only part way through the book, but I can assure any interested party that the book is well worth the investment.


0 of 2 people found the following review helpful:

Easier to understand, 2008-08-25
The nice thing about this book is that it delivers exactly what it advertises. It claims to be easier to understand than most risk management manuals and it truly is, while still maintaining comprehensive coverage of the subject matter.

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