Showing posts with label Management decision making. Show all posts
Showing posts with label Management decision making. Show all posts

2/28/2010

Review of The Risk Management Process: Business Strategy and Tactics (Hardcover)

This book had more then what I was looking for.

I was looking for a book on general financial risk management theory and processes (especially market risk management). This book gave more then that. It gave me insight on the theories and rationales on the topic.

The coverage extended somewhat beyond financial risks, giving background on risk management to an organisation as a whole.

The structure of the book was easy and logical, first part being the background and theory or risk management as a whole, part two detailing into the maths of risk management, and the last discussing control processes.

One lacking part (which I was looking for) was that it did not discuss in detail the business processes themselves. I may have over expecting it, but the topic seem to have missed out.



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2/23/2010

Review of Derivatives: Valuation and Risk Management (Hardcover)

I have used Miller & Dubofsky to teach my undergraduate options class in the past and this year I switched to Hull (7th edition).I find that I much prefer the way Miller & Dubofsky is organized. A good example would be the treatment of forwards and futures.Miller & Dubofsky begin with forwards and move on to futures.In Hull they are treated together and this serves to confuse students, especially when it comes to valuation and marking to market.Another strength of the book is that risk management is addressed right away whereas in Hull it seems to be an afterthought.Hull's notation is also quite confusing for students.Hull tries to do everything using continuously compounded rates but for many instruments (FRAs and Interest Rate Swaps for instance) this is not possible.The result is a mish-mash of compounding conventions in the same formula.

There are a few weaknesses of the Miller & Dubofsky text as well but these tend to be minor.I think it would benefit by a second edition.




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2/11/2010

Review of Risk: The New Management Imperative in Finance (Hardcover)

Mr. Gleason explains, without using "Greek letters and mathematical formulas, how risk management works" and shows why it has becomeimperative for financial services firms to establish global risk managementprocesses, which "allow firms to know, control, and accurately chargefor the financial risks they are taking."

After a brief overview ofthe full spectrum of financial and nonfinancial risks, two major sectionsof the book are dedicated to market and credit risk, how they differ andwhat they share. Market risk management is examined along product lines,commodities, currencies, fixed-income markets, equities, by describing thedrivers of price and volatility as well as available hedging tools. Thediscussion of credit risk outlines, at first, the challenges of findingmeasurement tools to accurately assess credit risk, and then describescredit risk management techniques in the trading and traditional lendingmarkets.In trading, the trend has been towards managing credit risk assettlement and pre-settlement risk. The advantages and disadvantages ofusing Monte Carlo simulations to measure pre-settlement exposure on aglobal basis are examined. Mr. Gleason then suggests to replace the currentpractice of trading limits with charging traders for credit. This requiresanalytical tools to quantify the credit cost of a deal. The section ontraditional lending describes how this business is being revolutionized bynew analytical tools that measure default probabilities and defaultcorrelations, loan securitization and the swapping of credit exposure, andthe shift, for banks, from being credit investors to becoming creditintermediaries.

Mr. Gleason then describes the various portfolio measuresof risk that have emerged in the 1990s and points out the work that remainsto be done: to develop tools to "measure risk from extreme marketmoves and illiquid markets." Finally, the author describes howoperational and organizational issues, with data being the biggest problem,will make the transformation to global risk management processeschallenging. The discussion ends with an overview of prerequisites forsuccess and pitfalls to avoid.

The book provides a concise and clearlywritten overview of and/or introduction to global financial risk managementchallenges and solution options. As such, it will be particularly useful tothose non-risk management professionals who are being asked to participatein the establishment of global risk management processes Mr. Gleason'sexperience as a risk management consultant can be sensed throughout thebook, his enthusiasm for the subject becomes particularly palpable andcontagious in the final sections.



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2/02/2010

Review of Managing with Dual Strategies (Hardcover)

Derek Abell is an internationally recognized professor at the Swiss IMD business school. He has shown THOUGHT LEADERSHIP on strategy in books like Defining the Business (1980) and Strategic Market Planning (1979).

This book summarizes Abell's complete experience on strategic planning. And I promise you; he has a lot to offer!

This fall of 2004, a leading Danish business school still used this book as curricula for their MBA-level course on business development. I have many newer strategy books on my bookshelf, but I agree fully with their choice.

Abell's core idea is that TO SUSTAIN EXCELLENCE, COMPANIES NEED DUAL STRATEGIES - ONE FOR THE PRESENT AND ONE FOR THE FUTURE.

The distinction between a PRESENT ("today for today") and FUTURE ("today for tomorrow") orientation is not the usual short-term, long-term distinction - in which the short-term plan is simply a detailed operations and budgeting exercise made in the context of a hoped-for long-term market position. Present planning also requires strategy - a vision of how the firm has to operate now (given its competencies and target markets) and what the role of each key function will be. The long-term plan, by contrast, is built on a vision of the future - even more important, on a strategy for getting there.

Planning for today requires a clear, precise definition of the business - a delineation of target customer segments, customer functions, and the business approach to be taken; planning for tomorrow is concerned with how the business should be redefined for the future.

Planning for today focuses on shaping up the business to meet the needs of today's customers with excellence. It involves identifying factors that are critical to success and smothering them with attention; planning for tomorrow can entail reshaping the business to compete more effectively in the future.

Planning for today seeks to achieve compliance in the firm's functional activities with whatever definition of the business has been chosen; planning for tomorrow often involves bold moves away from existing ways of conducting the business.

Planning for today requires an organization that mirrors current business opportunities; planning for tomorrow may require reorganization for future challenges.

IN SHORT, PLANNING FOR TODAY IS ABOUT MANAGING CURRENT ACTIVITIES WITH EXCELLENCE; PLANNING FOR TOMORROW IS ABOUT MANAGING CHANGE.

I've read this book three times since it was published (okay, I may be somewhat slow). And each time, I add to my knowledge on working with strategy. Having worked very much with strategic management in practice over the last 15 years, I find it amazing that I cannot make more people read this book. But I won't give up. If you don't have time to read the full book, then consider reading Abell's article on the same subject in Sloan Management Review, spring 1999. However, the article doesn't include much on Abell's heavy toolbox presented in the book.

Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business



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1/17/2010

Review of Risk Management and Insurance (Hardcover)

This textbook offers a detailed, panoptic view of the field of insurance and risk management. Author Etti G. Baranoff does not seem to promote a philosophical, narrative or analytical point of view on the subject. Instead, she aims to provide students with a dense introduction to the field's bedrock information. Therefore, she presents a vast number of facts related to insurance and risk management, but generally refrains from taking a position on them. This is the sort of book one is assigned as the well-chosen, required text in a course on insurance. The author expertly defines every necessary term and explores every important aspect of the decision to buy or forego insurance, including legal implications, policy variants and alternative products. We suggest that corporate risk managers may want to keep it on their bookshelves for its excellent definitions and its appendices, which offer illustrative excerpts from several different insurance policies. Even those who are not in the risk management business could benefit from some chapters, especially those recommending ways to calculate the appropriate amount of insurance.



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12/15/2009

Review of Against the Gods: The Remarkable Story of Risk (Hardcover)

Bernstein has written a thorough book that traces the linear progression of man's understanding of probability and risk.

This is a journey that begins with the importatioin of the arabic numbering system to the West andends with super-computer crunched chaos theory.In between lie the fathers(all men) of mathamatical understanding.These individuals are the storyof AGAINST THE GODS.Bernstein survey's the intellectual contrubutions ofeach as man strives to understood basic probability, the law of largenumbers, bell curves, regression analysis, uncertainty theory andeverything else you dimly remember from college statistics classes.Hespends the latter quarter of the book on risk and probability theory in thefinancial world, where theorists have developed portfolio analysis,volitility studies, hedging and sidebets and otherquantatative marketplays.

Credit to the author for balancing his story against the very highprobability that much of what these thinkers sought may be unattainable. He frequently mentions the humanity that these people try to explain withlaws formulated from observations in the natural world.Although rightlyimpressed with his intellectual frontiersmen, Bernstein has no problemrecognizing that the uncertainty that has always eluded explanation is usand that it helps make life worth living and progress possible.

This bookis interesting for what it is.A story of the development of theories.Iwould have enjoyed more of a focus on the applications of this intellectualprogression that led to the development of insurance and financial markets. Though these elements are mentioned often, they provide the backdrop forBernsteins survey of theory.I suspect another book awaits someone whowill reverse the order and use theory as a backdrop forthe mechanismsthat have allowed the modern economy to flourish and develop.The story ofinsurance, speculation, the beginning of capital markets, a monied economyand the like spring from the intellectual movements so well chronicled byBernstein.However, they are not the focus, which has the habit of makingthe reading dry and sometimes uninteresting to those not captivated by theactual numeric analyses and proofs which are amply offerred over the courseof the book.

If you like intellectual history and are looking to tie thebuilding blocks of probability and risk analysis together over the lastfour centuries than this book may well captivate you.If you are seekingan understanding of how these discoveries were applied to forge the moderneconomy we now take for granted you will find parts interesting but maywell feel that the story is incomplete.



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11/20/2009

Review of Risk Analysis: A Quantitative Guide (Hardcover)

Whether you are attempting Monte Carlo simulation for the first time or have plenty of practical experience, Vose's book is the best text available.

Vose has done a great job providing a brief but solid introduction to probability and statistics. It also serves as a great practical reference for the details and applications of all of the commonly used probability distribution functions.

He expertly summarizes each of the main steps a modeller will face in developing a model, providing very practical examples with helpful figures illustrating exactly how to implement the example in a spreadsheet.

The introduction could be improved by describing the context of his book, largerly directed towards cost analysis of projects, in the very broad field of Quantiative Risk Analysis.If I could add a section to the book, I would devote a chapter to common errors committed by the novice modeller.Minor criticisms aside, I do not hesitate in recommending this book as a reference for experts. I think it provides the fastest routeup the learning curve for the novice modeller.



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11/19/2009

Review of Enterprise Risk Management: From Incentives to Controls (Hardcover)

James Lam has written a remarkably clear and relevant portrayal of how [enterprise] risk management can be used to deliver real value in any business.

During the past year, I developed a course for the Executive MBA program at Villanova University. After reviewing several books on the subject, I chose this one because of its clear and comprehensive coverage of the subject matter.

I would highly recommend this book to anyone with a serious interest in understanding risk management from a holistic perspective. This includes risk professionals as well as those involved in line and staff functions.



Click Here to see more reviews about: Enterprise Risk Management: From Incentives to Controls (Hardcover)

Review of Enterprise Risk Management: From Incentives to Controls (Hardcover)

James Lam has written a remarkably clear and relevant portrayal of how [enterprise] risk management can be used to deliver real value in any business.

During the past year, I developed a course for the Executive MBA program at Villanova University. After reviewing several books on the subject, I chose this one because of its clear and comprehensive coverage of the subject matter.

I would highly recommend this book to anyone with a serious interest in understanding risk management from a holistic perspective. This includes risk professionals as well as those involved in line and staff functions.



Click Here to see more reviews about: Enterprise Risk Management: From Incentives to Controls (Hardcover)

10/24/2009

Review of The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (4th Edition) (Hardcover)

Written with great clarity, "The Strategy and Tactics of Pricing" is a phenomenal book.It begins with an explanation ofstrategic pricing, and proceeds to cover competition in the market place,segmentation of buyers, pricing and the marketing mix for industrial andconsumer goods, as well as the psychology of pricing.Also covered aremodels for determining price sensitivity, implications of sales staff pricesetting and negotiation, and finally, legal aspects of pricing.

Afterreading this book, you will understand the pitfalls of pursuing marketshare at all costs and common mistakes businesses and sales people makewhen setting or negotiating price.You will view your current pricingstructure and strategy in a new light, and be able to spot the weak spots. You'll have a better picture of how to attract the right buyers, those thatcan be served profitably.

The book indirectly touches on topics coveredin Co-opetition, and Thinking Strategically, as well as elements of theTheory of Constraints (see Eli Goldratt's "The Goal" and"It's Not Luck" or "Management Dilemmas" by EliSchragenheim)

I can't recommend this book highly enough.As for theother reader who states:

"After reading this book, I was able totalk circles around the $20,000 "marketing consultant" we wereconsidering."

believe it, it's that valuable!



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