Risk Management Reports

March, 2001
Volume 28, No. 3

Risk Management Bookshelf

Every five years I hazard an answer to the classic castaway's question: "What (few) books would you take with you if you were to be alone on an island for ten years?" Mine, of course, aims at those key volumes that I consider essential to anyone who tries to make better decisions using the tools of risk management. Presumptuous, yes, but age and experience permit me considerable latitude.

For the 2001 version of the essential library for the risk manager, I reviewed my suggestions in July 1990 and 1995. There are changes! My list now totals ten, not five. Two repeat from 1995 but only one remains from 1990. I'm sure that I overlook some gems and I trust readers will point them out to me.

Here is my current "must read" list, with references to earlier reviews:

1. Peter Bernstein, Against the Gods: The Remarkable Story of Risk (1997) - Easily the best-written discourse on the history of risk and risk management (RMR 12/97)

2. John Adams, Risk (1995) - From the United Kingdom and University College in London comes a philosophical dissection of uncertainty and how we culturally adapt to it. (RMR 12/97)

3. Harold Skipper (ed.), International Risk and Insurance (1998) - The most complete textbook, from the insurance vantage-point (RMR 2/98)

4. Vernon Grose, Managing Risk: Systematic Loss Prevention for Executives (2nd edition, 1996) - A crisp, punchy, and practical introduction to the discipline (RMR 11/94 and 7/95)

5. David McNamee and Georges Selim, Risk Management: Changing the Internal Auditor's Paradigm (1998) - Both a review and a textbook, from the auditor's perspective but valuable to any manager. (RMR 11/99)

6. John Ross, The Polar Bear Strategy (1999) - Aptly subtitled "reflections on risk in modern life." (RMR 12/99)

7. Peter Schwartz, The Art of the Long View (1991 - One of the bibles on scenario planning for the future, an essential technique of risk management (RMR 7/95)

8. Vlasta Molak (ed.), Fundamentals of Risk Analysis and Risk Management, (1997) - A valuable text from the public policy sector. (RMR 8/97)

9. John Allen Paulos, Innumeracy (1988) - Essential for understanding the quantitative side of risk management, and especially how others see the numbers we generate (RMR 10/95)

10. William Strunk, Jr. and E. B. White, The Elements of Style (Third edition - 1979) - If communication is the core of risk management, then how we communicate is essential. This 92 page paperback is the Bible for any risk manager using the English language. (RMR 7/90).

Other than Peter Bernstein's book and The Elements of Style, I could easily substitute others from my library. William Leiss collaborated with co-authors in Mad Cows and Mother's Milk and Risk and Responsibility, exceptional volumes from Canada. The Bavarian Reinsurance Company (now Swiss Re Germany) published two thoughtful compendiums of European authors, Society and Uncertainty and Risk is a Construct. Financial Risk Management, edited by GARP's Marc Lore and Lev Borodovsky, is a comprehensive handbook for the financial arena. Frank Knight's Risk, Uncertainty, and Profit (1921) is cited by many academicians, but who has actually read it? I haven't, so it doesn't make my top list. Ragnar Löfstedt and Lynn Frewer edited Risk and Modern Society in 1998, another readable review from England. Melvin Konner's Why the Reckless Survive looks at risk through the lens of human nature. Fred Church's Avoiding Surprises remains one of the best short introductions for smaller organizations, and The Greening of Industry, from John Graham and Jennifer Hartwell, recounts the rise of the risk management approach in industry's response to environmental problems in the United States. Howard Kunreuther's and Richard Roth's Paying the Price covers the status and role of insurance in natural disasters in the U.S. The Software Institute of America compiled an exhaustive Continuous Risk Management Guidebook aimed at process engineers and software designers, and James DeLoach wrote a similarly extensive Enterprise Risk Management: Strategies for Linking Risk and Opportunity. Another excellent textbook is the Seventh edition of Risk Management and Insurance, from Arthur Williams, Michael L. Smith, and Peter C. Young. Older volumes holding their value include Peter Drucker's Age of Discontinuity, Ralph Nader's Unsafe at Any Speed (which started the consumer movement in the U.S.) and The Invisible Bankers, a delicious dissection of the U.S. insurance business, by Andrew Tobias.

I should not leave this study of worthwhile books without noting that risk management also requires a sense of humor and humility. What better way to re-generate these frequently lost attributes by reading or re-reading the Winnie the Pooh books, by A. A. Milne, Kenneth Grahame's The Wind in the Willows, and, of course, the incomparable Alice in Wonderland and Through the Looking Glass, by Lewis Carroll.

Let's see what I suggest five years from now!

. . . the humor of absurdity, which arises whenever the disparity between our pretensions and reality is too stark for even the most blinkered of us to ignore.

John Allen Paulos, Once Upon a Number,
Basic Books, New York 1998


Copyright H. Felix Kloman and Seawrack Press, Inc.

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