The most recommended risk management books

Private market fund managers are, along with hedge fund managers, the magnates of the 21st century.

Although many come from a privileged background, quite a few are self-made men such as the founder of what was once the largest private equity fund management firm in the Middle East: Abraaj Capital. The rags-to-riches story of Arif Naqvi, his drive from his childhood in Pakistan to high international society is simultaneously mesmerizing and frightening.

A headlong rush starts as his ambition outpaces his already high success. The fall is crushing, not only for him, but also for his partners, his employees, and everyone who trusted him. The book is a perfect combination of factual analyses and storytelling.

This fascinating read tells the story of the rise and then spectacular fall of the once celebrated hedge fund Long-Term Capital Management.

What made LTCM so attractive to Wall Street investors was its stable of "dream team" quants and financial minds, led by the laconic John Merriweather. Merriweather (featured in the opening Chapter of Liar's Poker) was a former Solomon Brothers bond-trading guru, who after leaving the firm amid a scandal managed to assemble a team of financial powerhouses that included two Nobel Laureates as well as a cadre of respected traders.

From 1993 to 1997 LTCM's returns were first-rate; the sky seemed the limit for this small band of supertraders, professors, and modelers who arrogantly considered themselves a cut above the rest of The Street.

But in 1998, it all came crashing down...and right quick. Having believed their financial models could accurately predict price action not just in… show more.

The Nonprofit Board Answer Book is a question-and-answer style book that takes the learnings from The Best of Boards one step further. It addresses board functions and structure with a section on board member selection and development. Oftentimes nonprofit boards aren’t intentional about these items. The Q&A addresses all the common questions that persons new to a board would ask or need to know. Board Source is a phenomenal organization whose aim is to help boards succeed. When I was researching governance for chapter 1 of my book, I cited several Board Source tools as they really do have the experience with nonprofit governance through their research. I love that each chapter of the text closes with suggested action steps to make the book more hands-on and practical. 

This book is totally hilarious! It’s really pacy, utterly wacky, and laugh-out-loud silly. The pages are packed with lots of funny illustrations so none of the text seems overwhelming or goes on too long. It’s a handbook on how to avoid danger, written by Dr. Noel Zone, the greatest (and only) "dangerologist" in the world, and covers sneaky snakes posing as toothbrushes, sharks hiding in toilets, to robots disguised as kindly grandmas. My son, a reluctant reader first listened to the audiobook- which is narrated fantastically (we were in fits of giggles listening to it in the car), and then he happily and quickly read the second two books in the series. I think audiobooks are a fantastic way to get kids hooked on new characters and discover new authors.

For financial market practitioners, it would be unwise not to deeply care about the various financial risks associated with their uses.

This book thoroughly covers the whole set of such financial risks, i.e. market risk, credit/counterparty risk, liquidity risk (both on the asset and liability sides), broadening the subject up to the firmwide level risk. It goes both into theoretical and practical considerations (risk management of a portfolio of financial instruments), illustrated by useful examples, with a great pedagogical sense. 

One way to craft lessons learned is in the form of recommended best practices (or, as I prefer, “good practices”). Best practices represent collected and distilled wisdom from many observers, many projects, and many years of experience. Rapid Development includes 27 best practices for software development, with one chapter devoted to each. Although the book was published more than 25 years ago, most of these are still relevant. Indeed, several of them have been incorporated into routine contemporary practices: evolutionary delivery, designing for change, timebox development, and requirements scrubbing. Techniques such as inspections, miniature milestones, principled negotiation, and reuse are perennially pertinent.

We’ve all felt like a Cassandra at times, imploring people to see the obvious disaster to come - only to be ignored.

And even when that disaster as predicted materializes, we are rarely credited for having successfully seen what others could not so easily imagine. That said, for every accurate prediction, there are dozens, if not hundreds or even thousands of predictions that prove false.

As risk managers, our job is to reduce uncertainty by predicting the future as accurately as possible. So how do we sift through the chatter and find the most accurate warnings?

This book, written by former national security experts, offers an interesting methodology that can help us do that.  

This book was not only educational to students of the markets but was also entertaining with a compelling narrative storyline that showed how Jim Simons transitioned from a math academician to become the most successful hedge fund manager in history.

Although not stated explicitly, Simons and the team at Renaissance Technologies developed models that adhered to the Casino Paradigm by combining a positive expectancy model with solid risk management protocols. 

No author has had a greater impact on my thinking about entrepreneurship than Frank Knight.

He explained that entrepreneurs do not maximize anything, since the future is uncertain in a non-probabilistic sense. Instead they exercise judgment while facing an unknown future.

This book is divided into three parts. The first two parts read like a conventional economics textbook, but the third part is phenomenal. He explains why risk and uncertainty are different, which is a lesson that many economists and other social scientists still disregard. 

Forget bromides such as buying a stock because your experience with the company’s product has been good. The hugely successful money manager Howard Marks makes the essential point that the goal is not to find good companies but to make good purchases. “It’s not what you buy,” he says, “it’s what you pay for it.”  Investors who are interested in good outcomes rather than thrills will find many more sound principles in this book.