The Failure of Risk Management. Douglas W. Hubbard

      1  Cover

      2  About the Author

      3  Preface

      4  Acknowledgments

      5  PART ONE: An Introduction to the Crisis CHAPTER 1: Healthy Skepticism for Risk Management A “COMMON MODE FAILURE” KEY DEFINITIONS: RISK MANAGEMENT AND SOME RELATED TERMS WHAT FAILURE MEANS SCOPE AND OBJECTIVES OF THIS BOOK NOTES CHAPTER 2: A Summary of the Current State of Risk Management A SHORT AND ENTIRELY-TOO-SUPERFICIAL HISTORY OF RISK CURRENT STATE OF RISK MANAGEMENT IN THE ORGANIZATION CURRENT RISKS AND HOW THEY ARE ASSESSED NOTES CHAPTER 3: How Do We Know What Works? ANECDOTE: THE RISK OF OUTSOURCING DRUG MANUFACTURING WHY IT'S HARD TO KNOW WHAT WORKS AN ASSESSMENT OF SELF-ASSESSMENTS POTENTIAL OBJECTIVE EVALUATIONS OF RISK MANAGEMENT WHAT WE MAY FIND NOTES CHAPTER 4: Getting Started: A Simple Straw Man Quantitative Model A SIMPLE ONE-FOR-ONE SUBSTITUTION THE EXPERT AS THE INSTRUMENT A QUICK OVERVIEW OF “UNCERTAINTY MATH” ESTABLISHING RISK TOLERANCE SUPPORTING THE DECISION: A RETURN ON MITIGATION MAKING THE STRAW MAN BETTER NOTE

      6  PART TWO: Why It's Broken CHAPTER 5: The “Four Horsemen” of Risk Management: Some (Mostly) Sincere Attempts to Prevent an Apocalypse ACTUARIES WAR QUANTS: HOW WORLD WAR II CHANGED RISK ANALYSIS FOREVER ECONOMISTS MANAGEMENT CONSULTING: HOW A POWER TIE AND A GOOD PITCH CHANGED RISK MANAGEMENT COMPARING THE HORSEMEN MAJOR RISK MANAGEMENT PROBLEMS TO BE ADDRESSED NOTES CHAPTER 6: An Ivory Tower of Babel: Fixing the Confusion about Risk THE FRANK KNIGHT DEFINITION KNIGHT'S INFLUENCE IN FINANCE AND PROJECT MANAGEMENT A CONSTRUCTION ENGINEERING DEFINITION RISK AS EXPECTED LOSS DEFINING RISK TOLERANCE DEFINING PROBABILITY ENRICHING THE LEXICON NOTES CHAPTER 7: The Limits of Expert Knowledge: Why We Don't Know What We Think We Know about Uncertainty THE RIGHT STUFF: HOW A GROUP OF PSYCHOLOGISTS MIGHT SAVE RISK ANALYSIS MENTAL MATH: WHY WE SHOULDN'T TRUST THE NUMBERS IN OUR HEADS “CATASTROPHIC” OVERCONFIDENCE THE MIND OF “ACES”: POSSIBLE CAUSES AND CONSEQUENCES OF OVERCONFIDENCE INCONSISTENCIES AND ARTIFACTS: WHAT SHOULDN'T MATTER DOES ANSWERS TO CALIBRATION TESTS NOTES CHAPTER 8: Worse Than Useless: The Most Popular Risk Assessment Method and Why It Doesn't Work A FEW EXAMPLES OF SCORES AND MATRICES DOES THAT COME IN “MEDIUM”?: WHY AMBIGUITY DOES NOT OFFSET UNCERTAINTY UNINTENDED EFFECTS OF SCALES: WHAT YOU DON'T KNOW CAN HURT YOU DIFFERENT BUT SIMILAR-SOUNDING METHODS AND SIMILAR BUT DIFFERENT-SOUNDING METHODS NOTES CHAPTER 9: Bears, Swans and Other Obstacles to Improved Risk Management ALGORITHM AVERSION AND A KEY FALLACY ALGORITHMS VERSUS EXPERTS: GENERALIZING THE FINDINGS A NOTE ABOUT BLACK SWANS MAJOR MATHEMATICAL MISCONCEPTIONS WE'RE SPECIAL: