Fundamentals of Enterprise Risk Management: How Top Companies Assess Risk, Manage Exposure, and Seize Opportunity Paperback - 2009

From the rear cover

After the devastation experienced by AIG, Bear Stearns, Lehman Brothers, and other financial institutions, the need for effective, comprehensive enterprise risk management (ERM) systems has never been more stark or immediate. Whether your organization needs to implement an ERM program from scratch or radically improve upon an existing one, "Fundamentals of Enterprise Risk Management" is the most up-to-date, all-in-one resource for creating a proactive, clearly articulated ERM system. The book shows you how to use a highly innovative and surprisingly easy-to-use visual architecture for accurately identifying your orga-ni-zation's exposure to hundreds, sometimes thousands, of risks, and clearly seeing how they interlink with one another--and can potentially set off a cascade of negative effects. Packed with eye-opening case studies, engaging stories, and "lessons learned," "Fundamentals of Enterprise Risk Management" helps you: ● Avoid the dire consequences of failing to recognize both your external and internal risk exposures. ● Set up a world-class ERM system using the practical strategies, helpful examples, and unique tools. ● Create a central, easy-to-use knowledge warehouse to share information and support decision-making. ● See and manipulate complex risk relationships using innovative visual software such as Riskonnect(R). ● Exceed the monitoring requirements mandated by the Securities and Exchange Commission, Basel II, the Sarbanes-Oxley Act--and much more.

From the jacket flap

Anyone could see that offering exotic mortgages to people with lackluster credit histories was a risky proposition. But when the default rate started its inevitable rise, almost no one imagined that large, esteemed financial institutions would actually collapse. What happened? How is it that so many organizations completely failed to understand their risk exposures? Didn't they have risk management systems in place to reduce those exposures? One thing the financial crisis clearly shows, says the author of "Fundamentals of Enterprise Risk Management," is that traditional approaches to risk management are a failure. America's financial companies kept a narrow, inward focus on limiting the impact of a web of maddeningly complex risk exposures. But the job of enterprise risk management (ERM) is not to centrally control risk, but to accurately identify it--constantly scanning the horizon for changing conditions and monitoring for internal weaknesses--and to share the information widely. "Fundamentals of Enterprise Risk Management" offers an expansive yet focused approach that will radically improve your ability to recognize risk and minimize loss, as well as understand the level of risk that's required to pursue opportunities. Using examples from Home Depot, Boeing, Airbus, Nokia, and many other companies, the book's insights, strategies, and unique tools help you: ● Identify your organization's exposure to a multitude of business, financial, and hazard risks--then visualize risk relationships using innovative new applications, such as Riskonnect(R). ● Recognize hard-to-see internal risk expo-sures, such as weaknesses in your strategy, subcultures that can destroy your goals, and life cycle risks for different lines of business and operating units. ● Assign "risk owners" for every category of risk--thus eliminating the excessive com-plexity faced by a single risk manager--and align risk accountability with the organiza-tion's business model. ● Understand Nassim Taleb's concept of "black swans"-- unpredictable crises that seem to upend risk management stra-te-gies--and learn how seemingly random events are not always unexpected. ● Examine how companies such as AIG blindly exposed themselves to excessive risk--and how a knowledge warehouse would have clearly illuminated the risk exposures and possibly circumvented the 2008 financial crisis. ● Focus on the upside of risk and seize oppor-tunities that are attainable only by informed decisions on the acceptance of risk. Comprehensive, refreshingly clear, and packed with the latest insights from the field, "Fundamentals of Enterprise Risk Management" is essential reading for anyone responsible for monitoring risk exposures, in any setting--corporate, nonprofit, or government. John J. Hampton is the KPMG Professor of Business and Director of Graduate Business programs at St. Peter's College, and former Executive Director of the Risk and Insurance Management Society (RIMS). He lives in Litchfield, Connecticut.