The Top 10 Books of 2010 for Risk Managers

by Jared Wade on December 16, 2010 · 14 comments

If you’re a risk manager, your job is really difficult. There are few people within an organization who have a wider scope of challenges that need to be handled. Not only is there the day-to-day upkeep of ensuring the company is safeguarded against all the known risks, but there is the constant need to look past the horizon to see those emerging threats that could bring down the organization.

That’s why it’s important for risk managers to be voracious readers. Wearing so many hats and needing to understand so many different worlds, there is really no substitute for sitting down with a good book. For this reason, we try to review a few books each month in Risk Management magazine to help guide your selection process.

These were the 10 best we read in 2010.

10. Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It

by Jay M. Feinman

The basic goal of insurance has always been to provide policyholders with the security that unforeseen losses will not drive them to financial ruin. Insurers promise that if you buy their product, they will cover you if something goes wrong. But increasingly, policyholders have discovered that getting a claim paid can be an arduous task as insurance companies do everything they can to avoid their obligations. Essentially, insurers have broken the core promise that justifies the very existence of their product.

The motivation for this behavior can be summed up in one word: profit. These days, insurance companies are more interested in serving their shareholders than their policyholders. And the easiest way to increase the bottom line is to reduce the losses that come from paying claims. So they delay to take advantage of float (the lag time between taking in premiums and paying out claims) and maximize their earnings on invested premiums. Or they just deny any responsibility to pay at all and then defend their refusal — in court if necessary — in the hopes that the policyholder will give up when they exhaust their resources or the will to fight. (Read more)

9. Turbulence: Boeing and the State of American Workers and Managers

by Edward S. Greenberg, Leon Grunberg, Sarah Moore and Patricia B. Sikora

In the 1990s, amid shrinking revenues, Boeing’s commercial airplanes division began a 10-year program of innovation in an effort to remain competitive in an increasingly global marketplace. The changes involved all aspects of the business, from management to manufacturing to the corporate culture. The concepts of virtual design, lean manufacturing and outsourcing, among others, were introduced to improve efficiency. The company also saw an influx of women into what was a predominately male workforce. These changes transformed the company, and at the center of this upheaval were the employees who were left to make sense of it all.

Boeing’s story is not unique. Corporations in all sectors have had to confront the demands of today’s hyper-competitive environment to find new ways to stay on top. Boeing’s experience, then, is a useful case study of how businesses should — and should not — react to these changes. (Read more)

8. The Weekend That Changed Wall Street: An Eyewitness Account

by Maria Bartiromo

Though there have been a slew of books to surface that have focused on the dismal decline of Wall Street, perhaps none have been written by someone so connected to the major players of the New York financial field as Maria Bartiromo, the current anchor of The Wall Street Journal Report and the first person to ever report from the floor of the New York Stock Exchange. She has previously written for hefty publications such as BusinessWeek, the Financial Times and Individual Investor.

Using her journalistic experience, Bartiromo lays out the facts of the Lehman Brothers downfall using both her own account and those of the most powerful people on Wall Street. But seeing as this book was published a good two years after the collapse began, the most fascinating aspects of The Weekend That Changed Wall Street: An Eyewitness Account were not so much the details of the collapse (after all, how many times can we read about that?), but the book’s early focus on the lavish lives of those involved in the Wall Street game; Bartiromo details the parties they threw, the apartments they owned that resembled art galleries and the confidence they exuded, which came across not only in their business conversations, but also in the casual talks between the author and her trusting subjects. (Read more)

7. Learning from Catastrophes: Strategies for Reaction and Response

by Howard Kunreuther and Michael Useem

Nassim Taleb’s “black swan theory” details how society has been shaped time and time again by incredibly rare events of extreme impact. Historic events from the assassination of Franz Ferdinand to September 11 and the rise of the internet to the fall of the Berlin Wall all fit the bill. But more than just being rare and transformative, the qualification that truly makes something a “black swan” is that is was entirely unpredictable. No one could see it coming. And while it is certainly a forgivable offense for society to fail to see something that was, by definition, unforeseeable, it is not forgivable for us to fail to learn from it.

This is the underlying message of the aptly titled Learning from Catastrophes, a collection of studies in risk management edited by Howard Kunreuther and Michael Useem, professors at The Wharton School at the University of Pennsylvania. The book is a good blend of traditional risk management lessons and anecdotal evidence to reinforce these classic tenants. Scholarly enough for coursework but interesting enough for casual skimming, the work focuses on the disasters of the past decade and can be considered the first “history” of the catastrophes that dominated the globe in the past decade. (Read more)

6. Good Boss, Bad Boss

by Robert I. Sutton

How does a boss know if he or she is doing a good job? And what can a boss do to make sure they never become a toxic “bosshole,” a colorful term that Stanford University professor Robert Sutton, Ph.D uses ing Good Boss, Bad Boss: How to Be the Best…and Learn from the Worst?

The key, according to Sutton, comes down to a simple question every boss must ask of him or herself: do you really understand what it is like to work for you? Too many bosses fail to consider how their behavior affects employees, and instead of being viewed as a compassionate, capable leader, they wind up being categorized as destructive, incompetent jerks that no one wants to work for.

But the engaging and practical Good Boss, Bad Boss aims to save all these bad bosses from themselves and make the good bosses even better by outlining all the defining features that make a boss great. From learning the difference between wisdom and intelligence to acting as a human shield for your employees, to simply understanding the value of naps and cool temperatures, the book is replete with valuable advice that is useful not only for bosses, but for anyone in the workplace looking for a little insight into the optimal boss/employee relationship. (Read more)

5. How Risky Is It Really?

by David Ropeik

In the aftermath of the nuclear meltdown at Chernobyl, 56 people died from acute radiation exposure. (The World Health Organization estimates that the lifetime radiation-induced cancer death toll from the incident could reach 4,000.) This accident and others like it have led to regulations that have discouraged nuclear power plant construction around the United States. As a result, we rely on fossil-fuel-burning plants for our power needs, despite the fact that the pollution they cause leads to an estimated 3,600 deaths every year. Since the Chernobyl meltdown in 1986, less than 100 have died from radiation-related conditions stemming from the incident. During that time, 79,000 people have died from exposure to pollution from fossil-fuel burning power plants.

As this example demonstrates, our perception of risk often greatly differs from the actual threat. Author David Ropeik, a Harvard instructor and risk consultant, points out that this perception gap can lead to poor decisions and misplaced risk management efforts on both a personal and global level. Ropeik does not define what risks are worth worrying about, however. Instead, How Risky Is It, Really? is an effective and engaging look into the psychological and societal factors that cause us to create these misguided views of risk in the first place. (Read more)

4. The Little Big Things: 163 Ways to Pursue Excellence

by Tom Peters

When Tom Peters and Robert Waterman published In Search of Excellence, it changed business. Named by NPR as one of the top three business books of the past century, their 1982 work detailed the art of management in a time when there were not dozens upon dozens of major new business books being printed each month.

As unheralded consultants with McKinsey, Peters and Waterman developed eight major themes that defined excellent management and discussed how 40 companies had used these principles to become industry leaders. These tales were so well-received that the book became “the first management blockbuster,” selling more than three million copies in four years.

Over time, however, many of the “excellent” companies used as examples proved to be anything but, with Atari being the most glaring. Furthermore, it was later revealed that the “quantitative” assessments used to identify excellent companies were much more arbitrary than had been disclosed. Peters and Waterman had used their knowledge of the corporate world to determine which companies to profile, but there was never any systematic formula.

Peters’ new work will not face similar controversy. Not intended to be another management Bible, The Little Big Things takes a shotgun approach, cataloging 163 ways to pursue excellence. Peters is not offering any overarching strategy to thrive — he is simply giving readers 500 pages of tenuously connected thoughts on the topic.

Impressively, it works. (Read more)

3. The Art of Choosing

by Sheena Iyeng

We all know that the decisions we make in life ultimately shape who we are and what we become. But rarely has there been a book that delves into each and every choice we make quite like The Art of Choosing. Author Sheena Iyengar relies on a lifetime immersed in the field of psychology to thoroughly and successfully explore the science behind the way the brain — both consciously and subconsciously — explores options in life.

Iyengar, a professor at Columbia Business School and the university’s department of psychology, details numerous influences on our choices — one of the most important being culture. Did you know that choice is valued much more highly in the United States than it is in Japan? In one of the many studies Iyengar cites (most of which are her own), she finds that the Japanese “often wanted someone else to decide, for example, what they ate, what they wore, when they woke up in the morning, or what they did at their job. Comparing responses between the two, Americans desired personal choice in four times as many domains of life as did the Japanese.” She also focuses on environment, politics, economy, religion and history as other factors that contribute heavily to an individual’s choices. In addition, Iyengar explores the theory of too much choice, citing another experiment to prove her findings that having too many options to choose from is, in most cases, a bad thing.

Though I do not often read psychology books, I found this one revealing of myself on a level no other book has reached. I do not think it would be too far off to say that this work could, in some respects, be considered a self-help book. (Read more)

2. Where Good Ideas Come From

by Steven Johnson

Johnson takes the reader on a guided tour that goes from stories of Charles Darwin in the Galapagos to FBI counter-terrorism agents in Phoenix to physicists in a Johns Hopkins cafeteria to Johannes Gutenberg in Rhineland, Germany. Each story is as engaging as the next and, together, they lay out the means by which true, innovative thought develops.

In short, great ideas are nearly always based on the very good ideas before them, not rooted in epiphanies or “eureka moments.” Real innovation, at least that which can be put into practice, percolates slowly as hundreds of mini-concepts blend into a fabric of advanced cognition. It also often requires a lot of trial and error — and just some good old-fashioned luck. (Read more)

1. The Big Short

by Michael Lewis

The Big Short is the best book about the biggest financial meltdown since the Great Depression. Michael Lewis very well might be the best nonfiction writer on the planet and his talents are on full display throughout.

Readers follow a series of players behind the rise of speculative trading during the collapse of the mortgage industry. By now, terms like credit default swap and collateral debt obligation are household words (even if most of us still don’t understand them), but Lewis puts a personal face on the motivations and actions of those who helped this whole mess spiral out of control while also making the opaque world of finance understandable to the layman.

Many of the other books that have covered the financial crisis have spent a lot of time villainizing those responsible. And, hey, it’s not like many of them don’t deserve it. But what makes The Big Short a step above is its ability to remain detached from morality plays. Due to this, many of the characters come away looking even worse — and we are left not with a work by a man on a pulpit but just a classic book that will become the defining account of a reckless era.

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.

{ 14 comments… read them below or add one }

Dullard December 16, 2010 at 4:19 pm

You need to expand your horizon if these are your top ten!

Emily Holbrook December 17, 2010 at 9:39 am

Please do let us know what other titles you consider the best for risk managers that were published in 2010. Thanks.

Bill December 17, 2010 at 12:32 pm

Dullard: An effective leader/manager/contributor does nto simply relate a problem they will also offer solutions to correct the situation. If you have additional references that should be on the list why don’t you share with the rest of the class?

Rick Vassar December 17, 2010 at 12:37 pm

How about “Hide! Here Comes the Insurance Guy: Understanding Business Insurance and Risk Management”. I may be a little biased, since I wrote it, but I believe it’s the only text out there that gives a perspective from the trenches. Solutions, not descriptions…

W.T. Wiseman December 17, 2010 at 12:46 pm

I would like to add “Surviving and Thriving in Uncertainty – Creating the Risk Intelligent Enterprise” by Freerick Funston and Stephen Wagner (Wiley Press, c 2010) to your list.

C. Taylor December 17, 2010 at 1:16 pm

I second the recommendation of Funston & Wanger’s “Surviving & Thriving in Uncertainty – Creating the Risk Intelligent Enterprise”. Its my new ERM bible.

Ed { The IT Insurance Guy } December 17, 2010 at 2:53 pm

How about “Insurance Premiums Are Killing My Business” by Craig Rowe http://bit.ly/insurance-premiums-are-killing-my-biz ?

J Smith December 18, 2010 at 12:21 pm
Jewel Mooney December 23, 2010 at 3:47 pm

I would like to add “Surviving and Thriving in Uncertainty – Creating the Risk Intelligent Enterprise” by Freerick Funston and Stephen Wagner (Wiley Press, c 2010) to your list.

Martina Dotson December 24, 2010 at 7:33 am
CuznDupree February 22, 2011 at 4:02 pm

Maria Bartiromo could easily be omitted from the list. Your time would be better spent with Funston & Wanger’s work or if you are intent on reviewing the fall, stick with the Big Short. Maria’s “ghost” probably wrote most of the book anyway, although that might increase its value.

HUBERT WHITNEY SMITH JR April 14, 2011 at 12:40 pm

GOOD DAY I WAS WONDERING IF I COULD BE ABLE TO GET ALL OF THE BOOKS THAT YOU HAVE ONLINE PLEASE & THANK YOU IN ADVANCE. MY ADDRESS IS HUBERT W.SMITH JR DOMINGO HEIGHTS EAST STREET SOUTH P.O.BOX N1551 SUITE 104 NASSAU,BAHAMAS.

uli November 26, 2011 at 2:28 am

Nice list. Thanks for putting it together. I would also recommend

Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives http://goo.gl/2Nf1N

And of course: Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management
http://goo.gl/uadlw

Garrison January 20, 2012 at 2:02 am

Thanks for the top ten books for risk manager; they were quite interesting to read-through. If you are looking for the best Risk Management services for your company, then check out http://riskwise.biz/.

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