The Failure of Risk Management: Why It's Broken and How to Fix It
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The Failure of Risk Management: Why It's Broken and How to Fix It

4.14 of 5 stars 4.14  ·  rating details  ·  77 ratings  ·  18 reviews
The Failure of Risk Management explains which risk analysis methods work, which don't, and how to tell the difference. The Failure of Risk Management discusses topics relevant to the management of any risk including: Financial Risks, Natural Disasters, Industrial Accidents, Product Safety, Technology Risks, Project Failures, Engineering Disasters, Pandemic Viruses, Compute...more
ebook, 304 pages
Published April 6th 2009 by John Wiley & Sons
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Mike Smith
I read this book out of professional interest. It likely won't appeal to anyone who doesn't work in the areas of risk analysis and risk management. Author Hubbard explains why, in his opinion, the most popular risk analysis methods are ineffective and may, in fact, cause more harm than they prevent. The popular methods are based on what he calls "scoring systems", assigning a score to a risk using a poorly defined scale such as 1 to 5 or "low", "medium", and "high". He gives reasonable arguments...more
Thomas Davidson

Like the Black Swan, this book opened my eyes to the failure of risk management. My issue is that it shows why qualitative risk management fails but does not provide evidence for the accuracy of quantitative methods other then vague statements by the author that he goes back and checks his estimates. Independent studies I have found for nuclear facilities, there are surprisingly few, put in doubt even quantitative methods. That being said, enjoy the mathematics of quantitative methods but believ...more
Roger Williams
This book is a must-read for those that make, or contribute to, decisions. Just like in How to Measure Anything: Finding the Value of Intangibles in Business, Hubbard pulls no punches in describing what works - and what doesn't.

The book begins with a survey of the current state of risk management in many different fields. It is made painfully obvious that particularly in IT and project management, we are ignoring basic knowledge from fields such as actuarial science. Hubbard makes it clear that...more
Steven Peterson
This is a very handy work on risk management. Douglas Hubbard, the author, takes the “field” of risk management to task for many practitioners simply not having a clue and doing a disservice to their organizations. He emphasizes quantification and abhors the “soft” risk management practices that are all-too-common. His introductory lament sets the book’s tone (Page xi): “Unfortunately, risk management based on actual measurements of risks is not the predominant approach in most industries.” More...more
Dennis Boccippio
I had high expectations for this book after reading "How to Measure Anything", and unfortunately none of them were met. My very short review would state: were it not for those high expectations, I would have stopped reading the book about 1/3 of the way in, but based on past performance, I stuck it through to the end. That was a mistake.

The defects in Hubbard's second book are many. First and foremost, it is simply not pleasant to read. While "How to Measure" adopted a posture of helpful tutoria...more
Ozzie Gooen
I nice put-down of the existing field of Risk Management, with some details of how to fix it. On the whole though, it felt a bit like a 300 page rant against many idiots on the field, though I guess that's not much of a surprised from the book title.

I would also imagine that much of what he's saying here really applies to probability. Douglas Hubbard kind of defined risk as the "probability of bad things", so obviously there's a lot of overlap. As such many of the arguments he gives to pursue ri...more
Sam Motes
Hubbard gives good examples why simple risk modeling techniques such as red, yellow, green rankings and others are too simple. He makes the argument that those that argue that at least they are something and better than nothing can be blatantly wrong since they give a false since of control. The last part of the book he makes the case for Monte Carlo analysis. The power of Monte Carlo and other techniques like it is the ability to look for multiple variables impacting a risk and looking for caus...more
Ricardo Vargas
Polemic book from Douglas Hubbard that makes critics of the theory and the existing tools used for risk management. It is a book that is worth reading to get a different perspective of the problem, mainly if you like or use quantitative risk analysis like me.

Livro polêmico de Douglas Hubbard que critica toda a teoria e ferramentas existentes para o gerenciamento de riscos. Um livro que vale a pena ser lido para ter outra perspectiva do problema, principalmente se você é adepto de análises quan...more
Jonathanstray Stray
Good stuff. Themes:

1) most people who peddle "risk management" cannot answer the question "how do you know it works?"
2) humans have lots of psychological biases around risk perception
3) thus, quantitative and verifiable methods are the way to go
4) the US Department of Homeland Security is stupid

And further good stuff, including comments on the financial crisis any how existing risk models missed it.
Great insights. There has been a raging battle for years between different camps over the "right" way to do risk analysis in fields other than insurance and finance. This book takes the quantitative risk assessment view and does a good job explaining why. Information Security professionals in particular will find this book enlightening, if not a little bit alarming.
Hubbard's work is a comprehensive and timely investigation of the nature of today's risk management practices. Quickly ushered to completion the book opens up the chasm of risk management that is the financial crisis of 2008 while taking the reader across on a rope bridge. Enjoy the view but don't look down for too long.
I never really liked rating risks as low, medium, high - or any other arbitrary scale. This book does an excellent job explaining why - and proposes a solid, reliable replacement.
David Giancarlo Odar otero
Muy buen trabajo en el campo de Riesgos Financieros, menciona esos "detalles" que muchas veces dejamos pasar sin darnos cuenta de las consecuencias que pueden acarrear
Brandon Carlson
Liked it. Lots of bashing on management consulting and subjective risk assessments, but was good nonetheless.
Very interesting take.
Knowing nothing makes it easy to improve your knowledge with the simplest measurements
Augusto Barros
Enlightening, to say least. A must read to anyone working with risk management.
Yury Averkiev
I liked the calibration tests.
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