The failure of risk management : why it's broken and how to by Douglas W. Hubbard

By Douglas W. Hubbard

A vital advisor to the calibrated hazard research procedure. The Failure of hazard administration takes a detailed examine misused and misapplied easy research equipment and indicates how probably the most renowned "risk administration" equipment are not any larger than astrology! utilizing examples from the 2008 credits problem, normal mess ups, outsourcing to China, engineering mess ups, and extra, Hubbard finds severe flaws in risk Read more...

summary: an important advisor to the calibrated danger research method. The Failure of hazard administration takes an in depth examine misused and misapplied simple research equipment and exhibits how probably the most well known "risk administration" equipment aren't any larger than astrology! utilizing examples from the 2008 credits concern, usual failures, outsourcing to China, engineering mess ups, and extra, Hubbard unearths serious flaws in chance administration methodsâ??and exhibits how all of those difficulties could be fastened. The options contain mixtures of scientifically confirmed and regularly used tools from nuclear strength

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Extra resources for The failure of risk management : why it's broken and how to fix it

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Except for certain quantitative methods in certain industries, the effectiveness of risk management is almost never measured. The biggest failure of risk management is that there is almost no experimentally verifiable evidence that the methods used improve on the assessment and mitigation of risks, especially for the softer (and much more popular) methods. If the only ‘‘evidence’’ is a subjective perception of success by the very managers who championed the method in the first place, then we have no reason to believe that the risk management method does not have a negative return.

Often, a ‘‘change in culture’’ is cited as a key benefit of risk management. This, by itself, is not an objective of risk management—even though some of the risk management surveys show that risk managers considered it to be one of the main benefits of the risk management effort. But does the type of change matter? Does it matter if the culture doesn’t really lead to reduced risks or measurably better decisions? Of course it matters. ’’ This is a curiously common response, as if the consensus itself were the goal and not actually better analysis and management of risks.

Legal structure. This is the classic example of limiting liability of owners by creating a corporation. But risk mitigation can take this further even for existing firms by compartmentalizing various risks into separate corporate entities as subsidiaries, or for even more effective insulation from legal liability, as completely independent spinoffs.  Activism. This is probably the rarest form of risk mitigation since it is practical for relatively few firms, but it is important. Successful efforts to limit liabilities for companies in certain industries have been won by advocating new legislation.

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