Risk management is an important discipline in the corporate sphere. If done properly, it can propel a well-run company pas what anyone imagined.
The face of risk management changed forever after the 2008 credit crunch. Through it all, it remains a constantly evolving field. One of the only ways to stay on top of things is to constantly invest in one’s education. A quality book written by an expert is probably the best option if you’re busy and can’t attend conventional classes and seminars.
Quick Look: The Best Risk Management Books To Read
- Financial Risk Management by Jimmy Skoglund and Wei Chen - Get this book
- The Essentials of Risk Management by Michel Crouhy, Dan Galai, Robert Mark - Get this book
- Business Risk and Simulation Modeling in Practice by Michael Rees - Get this book
- The Flaw of Averages by Sam L. Savage - Get this book
- Financial Risk Management for Dummies by Aaron Brown - Get this book
- Risk Management and Financial Institutions by John C. Hull - Get this book
- Risk Analysis: A Quantitative Guide 2nd Edition by David Vose - Get this book
- Financial Engineering and Risk Management by Rupak Chatterjee - Get this book
- Financial Risk Manager Handbook by Philippe Jorion - Get this book
- Thinking, Fast and Slow by Daniel Kahneman - Get this book
What You Should Look for in a Risk Management Book
When shopping for a good book on risk management, you should consider several things. First, the book should be written by a reputable expert in the field of risk management.
Also, you should take into consideration the prior knowledge and experience needed to fully grasp what’s written in the book. Finally, you should go for a book that offers both deep theoretical knowledge and actionable steps you can take to solve your company’s problem.
When checking out a book on risk management, or any other topic regarding economics and finance, make sure it was written by a well-known expert.
If you can’t find all the info on the writer in 5 minutes, you might be better off looking in another direction.
Also, look for often-recommended authors with a strong reputation among their peers. Major national and international accolades are a plus.
Secondly, you should consider the book’s target audience and whether you have the necessary background to get the most out of your investment.
If you’re a student, a book on advanced risk management strategies probably won’t do you much good. A book on the basics of risk management might be more like it.
Theory vs. Actionable Steps
It is a common misconception, especially among inexperienced managers and students, to envision theory and practice as two opposing principles.
However, experts and experienced managers can agree that theory and practice work best when used in synergy.
Therefore, you should aim for books that offer both sound theoretical explanations and actionable steps for real-life applications.
Our Picks for the Best Risk Management Books
The books in the following section were selected based on the criteria explained above. All the books were written by distinguished authors with ample experience and a wealth of practical and theoretical knowledge.
1. Financial Risk Management by Jimmy Skoglund and Wei Chen
Financial Risk Management, first published in 2015, has quickly earned the status of game-changer in the field of financial risk management.
The book addresses the problem from a brand new perspective and offers a complete approach to risk management, including the implementation of advanced risk analytics.
Aside from the market, liability risks, assets, and macroeconomics, the book also discusses the latest changes in regulatory practices, as well as firm-wide risk and model risk management.
Financial Risk Management was written for both beginners and seasoned risk management professionals seeking a deeper understanding of how the banking industry deals with risks.
2. The Essentials of Risk Management by Michel Crouhy, Dan Galai, Robert Mark
In the aftermath of the Great Recession of 2008, risk management underwent a permanent change. Old practices came crashing down and new ones were established, some of which by regulations.
The Essentials of Risk Management explains this transition and introduces the new regulatory framework, as well as current methodologies used to assess and manage credit risk. Enterprise risk management is also thoroughly explored.
Other interesting topics include corporate governance, credit transfer markets, stress testing, liability/asset management, scenario analysis, commercial credit analysis, counterparty credit risk, and more.
Along with invaluable insight into today’s business climate, this book also offers actionable steps for risk professionals in the post-crisis world.
3. Business Risk and Simulation Modeling in Practice by Michael Rees
Business Risk and Simulation Modeling in Practice is part of the distinguished Wiley Finance Series written by some of the world’s biggest authorities in the field.
Michael Reese penned this 2015 masterpiece on business risk management that went on to become an instant classic.
Between the covers, you’ll find a complete guide to risk assessment processes, possible approaches, objectives, applications, as well as challenges and benefits.
This book also offers extensive explanations of concepts and principles which govern risk simulation models and how to implement them in VBA and Excel macros.
4. The Flaw of Averages by Sam L. Savage
In The Flaw of Averages, Sam L. Savage explains the most common misconceptions and mistakes company executives make when assessing future risks. Savage demonstrates why the assessments based on averages are wrong in many areas, not just business.
He touches on climate change, the war on terror, healthcare, and many other subjects.
Instead of relying on statistical jargon, Savage explains advanced concepts in a conversational tone and with the help of animations and simulations.
At the very end, the author introduces probability management, a brand new field that is rooted in advanced technology.
5. Financial Risk Management for Dummies by Aaron Brown
Award-winning author Aaron Brown wrote this short and brilliant book on risk management as a step-by-step guide for risk managers of all experience levels.
The language is simple and easy to understand and makes use of exceptionally clear explanations and effective examples to illustrate the main points.
Though concise, Financial Risk Management for Dummies covers all the key points of risk management, including measuring, managing, and communicating risk within a financial organization.
Aside from theoretical explanations, Brown helps readers to develop their own risk management strategies.
6. Risk Management and Financial Institutions by John C. Hull
Risk Management and Financial Institutions is among the most prominent books in the Wiley Finance Series. It offers a unique comprehensive insight into how various financial institutions view risk and approach risk management.
The author explains how differences in structure shape risk management policies in different institutions.
This is a must-read for all risk management professionals seeking to deepen their knowledge in the subject as it offers a multi-layered analysis of risk management.
It also offers solutions to practical problems.
7. Risk Analysis: A Quantitative Guide 2nd Edition by David Vose
This is an updated and heavily revised edition of the best-selling first edition published in 2008.
The book deals with the quantification of risk, how risk modeling works, and how to make good and sound decisions based on model projections.
David Vose writes in an easy-to-understand language that’s light on the professional jargon. The explanations are clear and precise.
Along with the variability and uncertainty of corporate risks, the author also offers a huge range of models using Monte Carlo simulations.
8. Financial Engineering and Risk Management by Rupak Chatterjee
Rupak Chatterjee boldly identifies problems with risk management and assessment that led to the 2008 credit crunch.
He introduces a whole new approach built from the ground up. Chatterjee also explains advanced techniques and tools that can help risk management professionals operate better in the post-2008 world.
The book is not written for beginners and those with a casual interest in risk management.
If you’d like to challenge conventions and established rules, this is the book for you.
9. Financial Risk Manager Handbook by Philippe Jorion
Philippe Jorion’s Financial Risk Manager Handbook is a comprehensive and well-rounded guide for seasoned professionals in the field of risk management, particularly candidates for the GARP FRM exam.
The book is backed by GARP and is part of the Wiley Financial Series.
The book covers all aspects of risk management, including topics such as quantitative methods, credit, market, integrated risk management, liquidity, capital markets, and much more.
Jorion explains everything a professional risk manager should know to successfully lead his or her company.
10. Thinking, Fast and Slow by Daniel Kahneman
Daniel Kahneman, Nobel Prize laureate in economics and winner of multiple domestic and international awards, is among today’s most significant thinkers.
On the pages of the masterfully written Thinking, Fast and Slow, Kahneman takes readers on an amazing journey through the mind and the 2 thought processes that form its decision-making – fast and slow.
The fast process is based on emotions and intuition, while the more deliberative slow process is based on logic.
Kahneman also explains how cognitive biases work and affect everything around us, including economics, stock markets, risk assessment, and even vacation planning.
Finding the Best Risk Management Books
Finding the best risk management books can take some time, though the list presented in this article should give you a good idea of where to start. If you’re hungry for more, may we suggest checking out our selection of the best economics books or business books. If personal finance is what you’d like to improve, feel free to check out our list of the best personal finance books.
Frequently Asked Questions
What are the elements of risk management?
Risk management focuses on identifying, measuring, evaluating, monitoring and preventing risk.
What should you consider in a good risk management course?
You need to think about the theories, practicality, the target audience and the author’s experience.