19 Books Like World-Class Risk Management

It wasn’t until reading this book that I realized how important it was to focus on the fast, instinctive part of our mind. Getting that initial judgment and reaction right makes everything else easier. Too often, I found myself wanting to understand things logically and rationally, assuming that my instincts and emotions were simply wrong.

This book helped me understand how useful both systems were and how to leverage them to achieve my goals faster and more effectively.

Published in 1997, DeBecker offered something no one else I was reading came close to: an explanation of warning signs that precede violence that are so subtle they leave many people with a bad feeling about a situation, for example, with a stranger, but no idea why they feel that way. The temptation then is to override the gut feeling: “What is wrong with me? It’s the middle of the day and this nice man just wants to help me carry my groceries up to my apartment.”

DeBecker himself is a fascinating figure. He grew up with a heroin-addicted mother who waved a gun around frequently and finally shot his stepfather before committing suicide when he was 16. DeBecker learned to rely on small, subtle clues to tell when she was dangerous and when she was not. After her death, he was taken in by Rosemary Clooney, the mother of… show more.

I recommend this book because it completely flips the idea of resilience.

Taleb argues that we shouldn’t aim to be unbreakable. Instead, we should aim to grow stronger from stress and volatility. I don’t agree with every example (and it’s dense at times), but it’s one of those books that forces me to think differently about systems, teams, and even my own mindset.

It’s a powerful reminder that disruption isn’t the enemy, stagnation is. 

The summons to think in new ways and develop new awareness is a challenge I loved in this book. Gigerenzer distinguishes between an inner spiritual voice, intuition, and rational thinking: these are different ways of knowing and should be honored.

His numerous examples of the 3 critical skills for developing risk literacy are provocative but comprehensible. I’m encouraged to learn that my intuition in situations of uncertainty is often correct, and I should listen to it, even if I cannot immediately explain why. Why does this matter? The places where humanitarian relief work focuses are often highly unstable and dangerous. I must be able to explain how to do a risk assessment in less than fifteen minutes and make a quality risk decision.  Otherwise, it’s not helpful (simple solutions for complex problems).

We’ve all felt like a Cassandra at times, imploring people to see the obvious disaster to come - only to be ignored.

And even when that disaster as predicted materializes, we are rarely credited for having successfully seen what others could not so easily imagine. That said, for every accurate prediction, there are dozens, if not hundreds or even thousands of predictions that prove false.

As risk managers, our job is to reduce uncertainty by predicting the future as accurately as possible. So how do we sift through the chatter and find the most accurate warnings?

This book, written by former national security experts, offers an interesting methodology that can help us do that.  

For financial market practitioners, it would be unwise not to deeply care about the various financial risks associated with their uses.

This book thoroughly covers the whole set of such financial risks, i.e. market risk, credit/counterparty risk, liquidity risk (both on the asset and liability sides), broadening the subject up to the firmwide level risk. It goes both into theoretical and practical considerations (risk management of a portfolio of financial instruments), illustrated by useful examples, with a great pedagogical sense. 

I started working at Depository Trust Company in New York in September 1987 – a month later the “Black Monday” stock market crash happened! At the time, it was very difficult to see exactly what caused it. “When you are up to your neck in alligators, it is hard to remember why you drained the swamp!” This book explains how Wall Street banks hatched all those alligator eggs by hiring MIT math-whizz-kids and turning them loose without explaining the simplest thing about the stock market to them. One of the errors in their models was that they did not take bank holidays into account when calculating the time value of stocks and option prices.

This is the obvious recommendation, but a ‘must read’ nonetheless. 

Whereas Cialdini’s text focuses on our response to messaging (on risk or otherwise), Ripley’s book focuses on our response to the incident itself (…and so where the former leaves off, the latter picks up).

The Unthinkable gives readers a deep look into our own psyche to prepare us for how we are likely to response when faced with physical or mortal danger. Nobody knows exactly how they will respond in a high-hazard incident because so many instinctual processes take over.

But as Ripley so effectively explains, it is possible to know what these phenomena look like so that when we are experiencing them we can adjust accordingly to be more effective responders.

Amanda Ripley’s approachable journalistic style effectively turns a collection of meaningful risk management messages into a hard-to-put-down page-turner. 

Forget bromides such as buying a stock because your experience with the company’s product has been good. The hugely successful money manager Howard Marks makes the essential point that the goal is not to find good companies but to make good purchases. “It’s not what you buy,” he says, “it’s what you pay for it.”  Investors who are interested in good outcomes rather than thrills will find many more sound principles in this book.

Mark Minervini is undoubtedly one of the greatest traders to ever live. This book is an absolute gem, building on what O’Neil wrote in his book. Minervini has gotten his trading down to absolute precision, from when to buy, when to sell, and how to screen for stocks. It’s all in here. A must-read for anyone looking to learn about trading.