Welcome, risk professionals, to a carefully curated collection of must-read books that will elevate your risk management and decision-making skills to new heights. This article brings together the most influential and insightful texts in the field, providing you with a roadmap for expanding your knowledge, enhancing your professional expertise, and advancing your career.
Divided into three distinct categories – foundational risk management and decision-making texts, advanced risk analysis resources, and essential reads for every risk manager – this comprehensive list has been designed with your needs and aspirations in mind. Whether you’re seeking to deepen your understanding of core risk management concepts, explore advanced analytical techniques, or gain a broader perspective on the challenges facing today’s risk professionals, these books offer a wealth of wisdom, guidance, and inspiration.
RISK MANAGEMENT AND DECISION MAKING FOUNDATIONS
Decision Quality: Value Creation from Better Business Decisions
“Decision Quality: Value Creation from Better Business Decisions” is an indispensable resource for risk professionals seeking to elevate their decision-making capabilities and enhance their organization’s overall performance. The book, authored by experienced decision strategists Carl Spetzler, Hannah Winter, and Jennifer Meyer, presents a comprehensive framework that addresses the six key elements of decision quality, including clarity of purpose, creative alternatives, and commitment to action.
As a risk professional, you play a pivotal role in navigating complex business environments and safeguarding your organization’s interests. This book will equip you with practical tools and techniques to assess risk, manage uncertainties, and make informed choices that align with your organization’s strategic objectives. By embracing these principles, you’ll foster a proactive and data-driven approach to risk management, enabling your company to stay ahead of the curve and capitalize on opportunities in an ever-changing landscape.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Foundations of Decision Analysis
“Foundations of Decision Analysis” by esteemed experts Ronald A. Howard and Ali E. Abbas is a pivotal resource for risk professionals looking to enhance their understanding of decision-making in complex and uncertain environments. The book lays a solid groundwork for the principles and methodologies of decision analysis, providing comprehensive insights into probabilistic modeling, utility theory, and multi-objective decision-making. As a risk professional, you will benefit immensely from the book’s ability to break down complex concepts into easily digestible and applicable frameworks, allowing you to tackle challenging problems with confidence and precision.
Incorporating the wisdom and techniques presented in “Foundations of Decision Analysis” into your professional toolbox will empower you to make robust decisions that align with your organization’s objectives and risk appetite. By adopting a structured, analytical approach to decision-making, you will not only mitigate potential threats, but also identify lucrative opportunities for growth and innovation. This essential read will help you unlock your potential as a strategic thinker and decision-maker, driving value creation and competitive advantage for your organization.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
The Failure of Risk Management: Why It’s Broken and How to Fix It (Second edition)
“The Failure of Risk Management: Why It’s Broken and How to Fix It” (Second edition) by renowned expert Douglas W. Hubbard is a crucial read for risk professionals seeking to challenge conventional approaches and drive significant improvements in their organization’s risk management practices. The book exposes the flaws and limitations of traditional risk management methods, while offering actionable solutions to transform these practices into a more effective, data-driven, and quantifiable discipline. As a risk professional, you will gain a deeper understanding of how to critically evaluate existing methodologies, identify potential pitfalls, and implement cutting-edge strategies to bolster your organization’s resilience and adaptability.
By applying the insights from this thought-provoking book, you will empower yourself and your organization to make data-informed decisions that mitigate risks and capitalize on opportunities in a rapidly evolving business landscape. Hubbard’s expertise will guide you in developing a comprehensive risk management framework, enabling you to identify and prioritize threats, allocate resources efficiently, and enhance your organization’s overall performance. “The Failure of Risk Management” is an essential resource for risk professionals seeking to revolutionize their approach to risk management and drive lasting value for their companies.
Buy 2020 version on Amazon or find 2009 version as an audiobook or read 2009 version free on Kindle Unlimited
“The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty” by Sam L. Savage is a groundbreaking work that challenges risk professionals to rethink their assumptions and refine their approach to uncertainty. The book is centered around the provocative idea that, as Savage puts it, “Plans based on average assumptions are wrong on average.” Through a compelling combination of real-world examples, case studies, and humor, Savage demonstrates how the common reliance on averages can lead to significant misjudgments in risk assessment and decision-making.
As a risk professional, you will find immense value in Savage’s approach to tackling uncertainty, which emphasizes the use of probability management and stochastic techniques. He expertly illustrates the perils of the “Flaw of Averages” by saying, “In a stochastic world, the shortest distance between two points is not a straight line, it is a zigzag.” By understanding and adopting the principles presented in this book, you will be better equipped to quantify uncertainties, measure risks accurately, and make informed decisions that drive organizational success. “The Flaw of Averages” is a must-read for those seeking to overcome the limitations of conventional risk assessment and unlock the true potential of data-driven decision-making.
World-Class Risk Management
“World-Class Risk Management” by Norman Marks is a vital resource for risk professionals seeking to elevate their organization’s risk management practices to the highest level. Marks, an industry veteran with extensive experience in internal auditing and risk management, offers a comprehensive and practical guide to transforming your organization’s approach to risk. The book focuses on integrating risk management into everyday decision-making processes, emphasizing that risk management should be an enabler of success, rather than just a means to prevent failure.
As a risk professional, you will benefit greatly from Marks’ in-depth exploration of essential topics such as risk appetite, risk culture, and the role of the board in risk oversight. The author emphasizes the importance of communication and collaboration, stating that “the organization needs to work together as a single team, sharing information and aligning on objectives.” By embracing the principles and practices outlined in “World-Class Risk Management,” you will be well-equipped to develop a robust, proactive, and value-driven risk management framework that integrates seamlessly with your organization’s strategic goals. This essential read will not only advance your career as a risk professional but also contribute to the long-term success and resilience of your organization.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Guide to effective risk management
“Guide to Effective Risk Management 3.0” by Alex Sidorenko and Elena Demidenko is a forward-thinking, innovative resource for risk professionals looking to embrace the future of risk management. Sidorenko, an experienced risk management practitioner and thought leader, delivers a comprehensive and insightful exploration of the latest developments in the field. The book focuses on leveraging technology, integrating risk management with strategic decision-making, and adopting a more holistic approach to risk management practices.
As a risk professional, you will gain invaluable knowledge from Sidorenko’s expertise in risk management, his emphasis on quantitative techniques, and his commitment to challenging conventional wisdom. The author stresses the importance of integrating risk management into the very fabric of an organization, stating that “Risk management is not a separate business process. It is an integral part of all decision-making.” By applying the principles and practices laid out in “Guide to Effective Risk Management 3.0,” you will be able to develop a cutting-edge risk management framework that goes beyond mere compliance and delivers tangible value to your organization. This trailblazing book is a must-read for professionals looking to stay ahead of the curve and drive meaningful change in their organizations’ approach to risk management.
READ ONLINE FREE OR DOWNLOAD: https://www.researchgate.net/publication/323254437_GUIDE_TO_EFFECTIVE_RISK_MANAGEMENT_30
Buy audiobook: https://riskacademy.blog/product/audio-risk-management-book/, buy the book in a course with additional commentary and masterclasses: https://www.udemy.com/course/1687492/
Making Numbers Count: The Art and Science of Communicating Numbers
“Making Numbers Count: The Art and Science of Communicating Numbers” by Chip Heath and Karla Starr is an indispensable guide for risk professionals aiming to improve their communication skills, particularly when it comes to presenting complex numerical information. The authors, renowned experts in the field of communication, provide practical advice and strategies to help you convey numbers and data in a clear, engaging, and persuasive manner.
As a risk professional, you will benefit from the authors’ insights into the psychology of numerical communication and their techniques for making numbers more relatable, comprehensible, and impactful. Heath and Starr emphasize the importance of storytelling and context in conveying numerical information, stating that “Numbers become meaningful when they are connected to something we care about.” By embracing the principles and practices laid out in “Making Numbers Count,” you will be better equipped to communicate risk-related data and insights effectively, fostering a deeper understanding and appreciation of risk management within your organization.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Fact
“Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts” by Annie Duke is an insightful and compelling guide for risk professionals seeking to improve their decision-making skills under conditions of uncertainty. Duke, a former professional poker player and expert in decision-making, shares valuable lessons from her experiences at the poker table and explores the importance of embracing uncertainty and probabilities in making informed decisions.
As a risk professional, you will benefit from Duke’s unique perspective and practical advice on how to shift your mindset from seeking certainty to managing uncertainty. The author emphasizes the importance of separating outcomes from decision quality, stating that “We can make the best possible decision and still not get the result we want.” By adopting the principles and practices laid out in “Thinking in Bets,” you will be better equipped to evaluate situations objectively, assess probabilities, and make well-informed decisions that drive your organization’s success.
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ADVANCED RISK ANALYSIS
The Book of Why. The New Science of Cause and Effect
“The Book of Why: The New Science of Cause and Effect” by Judea Pearl and Dana Mackenzie is a groundbreaking exploration of causal reasoning that will revolutionize the way risk professionals approach decision-making and risk management. Pearl, a world-renowned computer scientist and philosopher, has developed a new science of causality that challenges traditional statistical methods and offers a more nuanced understanding of cause and effect relationships. As Pearl puts it, “To understand how things work, we need to know not only what causes what, but also what would happen if we were to intervene and make changes.”
As a risk professional, you will benefit from the book’s in-depth analysis of the three levels of causal reasoning – association, intervention, and counterfactuals. Pearl introduces the concept of “do-calculus,” a powerful tool for evaluating causal relationships and estimating the effects of interventions, noting that “By knowing the cause, we can infer what would happen under different conditions.” By embracing the principles and techniques outlined in “The Book of Why,” you will gain a deeper understanding of the underlying causes of risk, allowing you to make more informed decisions and develop more effective risk management strategies.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
“Risk Analysis: A Quantitative Guide” (2nd Edition) by David Vose is a comprehensive and essential resource for risk professionals seeking to strengthen their quantitative risk analysis skills. Vose, an authority in the field of risk analysis, provides a detailed guide that covers various quantitative techniques, including Monte Carlo simulation, decision trees, and Bayesian analysis. The book is grounded in the author’s conviction that “Uncertainty is not something we should fear, but something we should embrace and use.”
As a risk professional, you will gain invaluable knowledge from Vose’s extensive experience and clear explanations of complex concepts, as well as practical advice on how to apply these techniques in real-world situations. He emphasizes the importance of understanding the assumptions and limitations of quantitative risk analysis methods, stating that “There is no substitute for thinking.” By mastering the principles and methodologies laid out in “Risk Analysis: A Quantitative Guide,” you will be better equipped to quantify uncertainties, make informed decisions, and develop robust risk management strategies.
Business Risk and Simulation Modelling in Practice: Using Excel, VBA and @RISK
“Business Risk and Simulation Modelling in Practice: Using Excel, VBA and @RISK” by Michael Rees is a practical and insightful resource for risk professionals seeking to develop their skills in simulation modeling using widely accessible tools. Rees, an experienced consultant and trainer, provides a hands-on guide to risk modeling techniques, focusing on the powerful combination of Excel, VBA, and the @RISK software.
As a risk professional, you will benefit from Rees’ step-by-step approach to building and analyzing risk models, as well as his extensive real-world examples and case studies. The book demonstrates the relevance and applicability of these techniques across various industries and business functions, emphasizing that “Decision-making under uncertainty can be thought of as a process of identifying an optimal balance between risk and return.” By delving into topics such as Monte Carlo simulation, optimization, and statistical analysis, “Business Risk and Simulation Modelling in Practice” will enable you to effectively quantify uncertainties and make data-driven decisions that align with your organization’s risk appetite.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Project Risk Quantification
“Project Risk Quantification” by John K. Hollmann is a valuable resource for risk professionals looking to master the art of quantifying and managing risk in project environments. Hollmann, an experienced engineer and expert in project risk quantification, offers a comprehensive guide that delves into best practices, tools, and methodologies, such as probabilistic cost and schedule risk analysis, to effectively assess and manage project risks.
As a risk professional, you will greatly benefit from Hollmann’s practical approach and wealth of knowledge, as he walks you through the nuances of project risk quantification, emphasizing that “the quantification of uncertainty is the essence of risk-based decision-making.” The book explores essential topics such as risk identification, estimation, and mitigation, providing you with the tools to make data-driven decisions that minimize project uncertainties and maximize success.
Buy on the publisher’s website
Superforecasting
The Art and Science of Prediction
“Superforecasting: The Art and Science of Prediction” by Philip E. Tetlock and Dan M. Gardner is a fascinating exploration of the world of prediction and forecasting, offering invaluable insights for risk professionals aiming to enhance their predictive capabilities. Drawing on the groundbreaking research of Tetlock, the book delves into the mindset and techniques employed by “superforecasters” – individuals who consistently outperform experts in making accurate predictions.
As a risk professional, you will benefit from the authors’ insights into the habits and methodologies of superforecasters, such as their tendency to “break problems into smaller parts and adapt to new information.” The book emphasizes the importance of critical thinking, open-mindedness, and continuous learning in the pursuit of accurate forecasting. By adopting the principles and practices laid out in “Superforecasting,” you will cultivate the skills necessary to make better-informed decisions and enhance your organization’s ability to navigate uncertain environments.
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Bernoulli’s Fallacy: Statistical Illogic and the Crisis of Modern Science
“Bernoulli’s Fallacy: Statistical Illogic and the Crisis of Modern Science” by Aubrey Clayton is a thought-provoking and illuminating exploration of the limitations and misuse of statistical methods in modern science, offering crucial insights for risk professionals seeking to better understand the foundations of their field. Clayton critically examines the widespread reliance on statistical significance and p-values, revealing the potential pitfalls and consequences of such an approach.
As a risk professional, you will benefit from Clayton’s in-depth analysis of the historical and philosophical underpinnings of statistical methods, as well as his proposals for more robust and reliable alternatives. The author emphasizes the importance of a nuanced understanding of statistical concepts, stating that “Statistical methods do not produce certainty; they produce a quantified measure of uncertainty.” By embracing the principles and practices laid out in “Bernoulli’s Fallacy,” you will be better equipped to recognize and address the limitations of traditional statistical approaches in your risk management practices and decision-making processes.
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OTHER IMPORTANT BOOKS EVERY RISK MANAGER MUST READ
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
“Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets” by Nassim Nicholas Taleb is an eye-opening exploration of the often underestimated role of randomness and luck in decision-making, success, and financial markets. Taleb, a former trader and renowned author, challenges conventional wisdom by revealing how our perceptions of patterns, risk, and skill can be distorted by the impact of randomness.
As a risk professional, you will gain invaluable insights from Taleb’s thought-provoking analysis of the biases and fallacies that can lead us to misinterpret the role of chance in our lives and work. The author cautions against the dangers of overconfidence, stating that “Mild success can be explainable by skills and labor. Wild success is attributable to variance.” By understanding and embracing the principles laid out in “Fooled by Randomness,” you will be better equipped to identify and account for the influence of chance in your risk management practices and decision-making processes.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
While Fooled by randomness is still my personal favourite, you cal also buy Taleb’s latest book called Skin in the game.
Thinking, Fast and Slow
“Thinking, Fast and Slow” by Nobel laureate Daniel Kahneman is a groundbreaking exploration of the dual-process theory of human cognition, offering vital insights for risk professionals seeking to understand and improve their decision-making processes. Kahneman distinguishes between two systems of thought: System 1, which is fast, intuitive, and emotional, and System 2, which is slow, deliberate, and analytical. The book delves into the strengths and weaknesses of each system, revealing how cognitive biases and heuristics can impact our judgments and choices.
As a risk professional, you will benefit from Kahneman’s in-depth analysis of the cognitive processes that drive decision-making, as well as his practical advice on how to mitigate the influence of biases and improve critical thinking. The author emphasizes the importance of self-awareness, stating that “The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high.” By embracing the principles and practices laid out in “Thinking, Fast and Slow,” you will be better equipped to navigate complex risk scenarios and make well-informed decisions that drive your organization’s success.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Risk Savvy: How To Make Good Decisions
“Risk Savvy: How to Make Good Decisions” by Gerd Gigerenzer is a compelling and insightful guide for risk professionals seeking to improve their decision-making skills in the face of uncertainty. Gigerenzer, a renowned psychologist and expert in decision-making, challenges conventional approaches to risk assessment by emphasizing the importance of intuition, simplicity, and rules of thumb in making sound decisions.
As a risk professional, you will benefit from Gigerenzer’s unique perspective and practical advice on how to cultivate risk savvy, which he defines as “the ability to deal with uncertainties in an informed way.” The author stresses that “being risk savvy is not about avoiding risks; it is about recognizing and embracing them, and making informed decisions in the face of uncertainty.” By adopting the principles and practices laid out in “Risk Savvy,” you will be better equipped to navigate complex risk scenarios, avoid cognitive biases, and make well-informed decisions that drive your organization’s success.
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
Factfulness
Ten Reasons We’re Wrong About The World – And Why Things Are Better Than You Think
“Factfulness: Ten Reasons We’re Wrong About the World – And Why Things Are Better Than You Think” by Hans Rosling, Anna Rosling Rönnlund, and Ola Rosling is a captivating and enlightening book that challenges our misconceptions about the state of the world. The authors reveal how biases and outdated perspectives can distort our understanding of global trends and progress, leading us to make suboptimal decisions in risk management and other areas of our lives.
As a risk professional, you will benefit from the authors’ insights into the ten instincts that often cloud our judgment, such as the negativity instinct, the straight-line instinct, and the size instinct. By becoming aware of these instincts and embracing the fact-based worldview presented in “Factfulness,” you will be better equipped to make informed decisions in the face of uncertainty and avoid falling prey to cognitive biases. The authors emphasize the importance of maintaining a balanced perspective, stating that “Being always in favor of or against something is a sign of not thinking.”
Buy on Amazon or find this as an audiobook or read free on Kindle Unlimited
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I’m very confused and I have some questions about Risk Based Approach that need answers please.
1- is it true that the elements or the stages of risk-based approach is included in ISO 31000?
2- what is the difference between risk management and Risk Based Approach?
3- is there any other approaches rather than risk-based approach? accordingly, if there are no other approaches, why did they call it risk based approach?
4- Where can I use risk-based approach? is it only for AML CFT?
5- Is there any standard that talk about the Risk based approach? any book or organization that explain in more details about the risk-based approach.
What do you mean exactly by risk based approach, to me it is the same thing as risk management. But risk management is very different to what you think it most likely
Thank you for sharing useful information.