7 Best Risk Management Books [Updated 2021]
Risk management has always been a critical area for the financial industry but it has acquired a newfound meaning in the post-2008 credit crunch era as an increasing number of financial institutions are willing to go that extra mile to ensure they understand the element of risk well enough. Below is the list of 7 best books on risk management you must read in 2021 –
- The Essentials of Risk Management ( Get this book )
- A Practical Guide to Risk Management ( Get this book )
- Financial Risk Management: A Practitioner’s Guide to Managing Market and Credit Risk ( Get this book )
- Financial Risk Management For Dummies ( Get this book )
- Risk Management and Financial Institutions (Wiley Finance) ( Get this book )
- Practical Methods of Financial Engineering and Risk Management: Tools for Modern Financial Professionals ( Get this book )
- Financial Risk Management: Applications in Market, Credit, Asset and Liability Management and Firmwide Risk (Wiley Finance) ( Get this book )
Let us discuss each of the Risk Management textbooks in detail along with its key takeaways and reviews.
#1 – The Essentials of Risk Management
by Michel Crouhy (Author), Dan Galai (Author), Robert Mark (Author)
This is an excellent treatise on risk management, elucidating the nature of financial risksFinancial RisksFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy. faced by businesses and ways of effectively handling them. In this risk management book, the author draws on lessons learned from the 2008 financial crisis and explains how shortcomings of traditional risk management were exposed during the financial crisis, which led to a series of financial reforms in the aftermath. Readers are introduced to the current regulatory framework and the latest methodologies for credit risk assessment and management, along with the implementation of Enterprise Risk Management (ERM) for managing organization-wide risks. Some of the important topics covered in this work include post-crisis regulatory framework, corporate governance and risk management, measuring market risk, asset/liability management, commercial credit analysisCredit AnalysisCredit analysis is the process of drawing conclusions about an entity's creditworthiness based on available data (both quantitative and qualitative) and making recommendations about perceived needs and risks. Credit analysis also involves identifying, assessing, and mitigating risks associated with an entity's failure to meet financial commitments. risk, quantitative approaches to credit, credit transfer markets, counterparty risk, operational riskOperational RiskOperational risk is the business uncertainty a company comes across in the industry while executing its everyday business operations. Such risks arise due to internal system breakdown, technical issues, external factors, managerial problems, human errors or information gap. , model risk, and stress testing and scenario analysis among others. A complete guide on efficient management techniques in the post-crisis era for risk professionals as well as amateurs.
This textbook on Risk management is a detailed guide on how the idea of financial risk management underwent a sea change in the aftermath of the 2008 financial crisis and the evolution of complex risk management strategies and regulatory framework in the post-crisis era. The authors cover a wide range of topics, including effective methods of measuring, managing, and transferring credit risk, different forms of risk faced by businesses, and streamlining organizing organizational risk management. A concise yet excellent guide on credit riskCredit RiskCredit risk is the probability of a loss owing to the borrower's failure to repay the loan or meet debt obligations. It refers to the possibility that the lender may not receive the debt's principal and an interest component, resulting in interrupted cash flow and increased cost of collection. along with other financial risksFinancial RisksFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy. faced by corporations in the post-crisis era and methodologies devised to assess and manage them efficiently.<< Get this book >>
#2 – A Practical Guide to Risk Management
by Thomas S. Coleman (Author)
Risk Management Book Review
This work dwells at length on the very idea of risk and how it can be measured along with how measuring and managing risks are two completely different activities that must be coordinated carefully by organizations. The author helps create a better understanding of risk measurement and quantitative tools of risk management for financial organizations, which can be of great help for finance professionals as well as business managers. Some of the key topics covered by the author include risk management and risk measurement, how the ideas of randomness and luck create uncertainty while probability and statisticsStatisticsStatistics is the science behind identifying, collecting, organizing and summarizing, analyzing, interpreting, and finally, presenting such data, either qualitative or quantitative, which helps make better and effective decisions with relevance. help provide a rational perspective on managing anticipated as well as unanticipated risks. Other concepts discussed are financial risk events, systemic vs. idiosyncratic risk, quantitative risk measurement, methods of estimating volatility and VaR, analyzing risk, risk reporting, credit risk, and limitations of risk measurement. Risk professionals, as well as people from other walks of life interested in understanding the idea of financial risk and methods of measuring it, would benefit greatly from this erudite work.
Best Takeaway from this Book
This book on Risk management is an excellent work on risk management as an effective tool for managing a financial organization that introduces several concepts related to risk measurement and discusses tools and techniques employed for the purpose. The author intends to create a more fundamental understanding of risk measurement and techniques for measuring risk and outlines their potential as well as limitations as tools for effective organizational management. A complete guide on organizational management from a unique risk management perspective.<< Get this book >>
#3 – Financial Risk Management
A Practitioner’s Guide to Managing Market and Credit Risk
by Steve L. Allen (Author)
This textbook on Risk management is a definitive guide on financial risk management authored by a top risk management expert detailing every aspect of isolating, quantifying, and managing risk in an effective manner. The author elaborates on the nature of market and credit risk and illustrates with examples on how to implement methodologies and strategies for measuring and managing risks. To bring added practical value to the work, several real-world issues have been addressed, including mark-to-market valuation of trading positions, structuring limits for controlled risk-taking, and review of mathematical models as effective tools for managing various forms of risk. Along with more conventional methods and approaches, several derivative instruments are also discussed in terms of their utility for hedgingHedgingHedging is a type of investment that works like insurance and protects you from any financial losses. Hedging is achieved by taking the opposing position in the market. risk. The current edition of this risk management book comes with a companion website that provides a great deal of supplementary information on risk management and updated examples to help understand various aspects of risk management. A recommended work on risk management for finance professionals as well as those new to the field.
This is one of the best risk management books and has a complete resource on market and credit risk measurement and management from a risk expert meant to develop a detailed understanding of strategies and principles for measuring and managing these risks. This work covers some of the most basic questions related to risk measurement and methodically takes the reader through some of the most complex methods, including the use of derivative instruments for risk hedging and using mathematical models for effective risk controlRisk ControlRisk control is the activity of analyzing, interpreting, and assessing the business environment and decisions in order to minimize losses by detecting pitfalls and preventing businesses from falling victim to calamities, hazards, and avoidable losses.. A highly recommended read for anyone interested in understanding practical risk management.<< Get this book >>
#4 – Financial Risk Management For Dummies
by Aaron Brown (Author)
This is a rather concise work on risk management, but one which systematically covers every aspect of understanding risk, evaluating different forms of risk, and developing suitable strategies for risk management for any size and scale of organization. Penned by the winner of the GARP Award for ‘Risk Manager of the Year,’ this work breaks down a comprehensive approach to risk management in steps small and simple enough to be understood and followed clearly by anyone with an understanding of fundamental concepts related to risk management. This exceptional clarity of concepts related to managing, measuring, and communicating risk effectively in any financial organization sets this work apart from a majority of risk management books available. The author describes the responsibilities of a financial risk manager and helps the reader develop a personalized strategy to be a success at it. Complete work on risk management for aspiring or even experienced risk managers, which would get them going on the path of career success as well as a journey of discovering little known financial truths about the industry.
Written by an award-winning author, this is an introductory yet detailed guide on risk management primarily intended for financial risk managersRisk ManagersA risk manager takes care of the financial risk management of an organization by proactively identifying and analyzing potential risks along with the development of preventive measures to either entirely remove or minimize these risks.. This book lays down step-by-step instructions on how to manage, measure and communicates risk within an organization to be able to control the element of risk efficiently. A must-read for risk managers of all experience levels or anyone interested in understanding the significance of risk management for any organization.<< Get this book >>
#5 – Risk Management and Financial Institutions (Wiley Finance)
by John C. Hull (Author)
This comprehensive work adopts a multi-layered approach to the field of risk management in an effort to enhance the understanding of risks faced by financial institutionsFinancial InstitutionsFinancial institutions refer to those organizations which provide business services and products related to financial or monetary transactions to their clients. Some of these are banks, NBFCs, investment companies, brokerage firms, insurance companies and trust corporations. of various kinds and the issues involved. Make no mistake; this is not a work for those with a casual interest in risk management but for those striving to understand better how different institutions are affected in different ways by risk and how it should be measured and dealt with. The author leaves no stone unturned to reveal how complex variations in the regulatory structure of financial institutions shape risk management practices differently and how different types of risk manifest in different types of financial institutions. In the ultimate analysis, the author goes ahead to expose the dangers inherent in the financial system and how risk management can help better secure financial institutions and the financial industry at large if correctly applied. A highly recommended work for risk managers and finance professionals to understand the complex nature of financial industry relations and their relation with risk management practices.
It can be explained as a lucid work on a complex area related to risk management, that of its relevance to financial institutions in the context of financial industry regulations. The author stands out in his approach to the subject by methodically exposing layer by layer of the problem while providing a viable longstanding solution in the form of carefully devised and implemented risk management practices. A must-read for those interested in widening their understanding of financial industry regulations from a risk management perspective.<< Get this book >>
#6 – Practical Methods of Financial Engineering and Risk Management
Tools for Modern Financial Professionals
by Rupak Chatterjee (Author)
This work is nothing less than a wake-up call for the financial industry, where the author sets out to challenge conventional concepts about market risk exposureRisk ExposureRisk Exposure refers to predicting possible future loss incurred due to a particular business activity or event. You can calculate it by, Risk Exposure = Event Occurrence Probability x Potential Loss and shows how things work differently in the post-2008 scenario. He argues why risk management requires a whole new different approach in the existing market conditions and introduces readers to advanced tools and techniques with far greater relevance in the context of today’s financial realities. These statistical tools could enable risk professionals to measure real market behaviour and anticipate any major market swings and get ready to make the most of it. The author provides enough material to work out probability distributions for accurate valuation of financial instruments and risk modelling, among other applications outlined in this work. On the whole, an excellent guide for those not afraid of challenging conventional notions and put their mathematical skills to define and tackle financial risks in a whole new way.
Best Takeaway from this Book
An exceptional guide to accurate financial risk evaluation and understanding market behavior with the help of an array of advanced statistical tools placed at the disposal of the modern trader. This work deals with how risk management has changed in the wake of the 2008 credit crunch and how one should go about evaluating and managing risk in different forms. A highly recommended read for mathematically literate traders and risk professionals to enrich their arsenal of risk evaluation and management tools and techniques.<< Get this book >>
#7 – Financial Risk Management
Applications in Market, Credit, Asset and Liability Management and Firmwide Risk (Wiley Finance)
by Jimmy Skoglund (Author), Wei Chen (Author)
This is a masterful work on risk management practices in the context of the banking industry, with some of the most complex tools and techniques placed at the disposal of risk professionals. The authors have dealt at length with the increasing significance of developing and implementing advanced risk analytics in the modern banking industry and how the change in market behaviour and certain fundamental changes in risk-seeking behaviour have changed everything about banking in the conventional sense. A complete approach has been outlined for risk management, especially as applicable to banking operations, from a purely quantitative perspective. This work not only discusses the market, asset, credit, liability risks, and macroeconomicMacroeconomicMacroeconomics aims at studying aspects and phenomena important to the national economy and world economy at large like GDP, inflation, fiscal policies, monetary policies, unemployment rates. stress testing but also deals with the latest regulatory practices and model risk management along with firmwide risk. In totality, a highly recommended work on modern risk management practices which can help professionals and amateurs acquire a better understanding of how to evaluate and manage risks better in the banking industry.
A complete treatise on risk management in modern banking operations meant for aspiring as well as practising risk professionals to enhance their understanding of the banking industry from a risk perspective. The authors delve at length into how the latest regulatory practices influence risk practices and introduce readers to advanced concepts in model risk management. A gem of work in terms of a quantitative risk perspective on the banking industry.<< Get this book >>
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