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The Failure of Risk Management summary
Why it’s Broken and How to Fix It
23 mins
Brief summary
The Failure of Risk Management by Douglas W. Hubbard highlights how traditional methods of assessing risks fail in reality. He presents new, practical techniques to more effectively manage and communicate risk.
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The Failure of Risk Management
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Risk management means being smart about taking chances.
You’ve probably heard the term risk management; it’s part of the jargon used by organizations and governments, but it’s also entered the public vocabulary. While there are many definitions of the terms risk and management, it’s helpful to keep things simple:
Start with risk. You could say that risk is the likelihood and magnitude of an undesirable event. For instance, in a scientific or mathematical context, risk always describes the probability and magnitude of an undesired effect.
But what do probability and magnitude measure?
While probability always estimates the odds that something will happen (that your home being struck by lightning, for example), magnitude can be measured in a variety of dimensions, most commonly the loss of money or of lives. But keep in mind that an undesirable event could be anything – from a natural disaster to a major product recall to political instability.
Now that you know the definition of risk, what does it mean to manage it?
Managing risk means effectively using resources to decrease danger. For instance, one of the most common definitions of the word management is “the planning, organization, coordination and direction of resources toward defined objectives.” In other words, using what you have to get what you need.
In order to achieve this goal, a risk manager always tries to reduce the risk of pursuing an objective. Just like any other management task, managing risk is an effort to effectively use limited resources, like money and time, to complete a task.
Now that you know what risk management is, it’s time to learn how it developed and how it applies today.
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What is The Failure of Risk Management about?
The Failure of Risk Management (2009) is a comprehensive guide to the history, methods and myths of risk management. These blinks explain why common methods for managing risk are flawed and how to fix them; they also offer tried and true alternatives for measuring and mitigating risk.
The Failure of Risk Management Review
The Failure of Risk Management (2009) by Douglas W. Hubbard is a thought-provoking exploration of the pitfalls of traditional risk assessment methods. Here's why this book is worth reading:
- By challenging conventional wisdom, it offers fresh perspectives on risk management, allowing readers to question and improve their own approaches.
- With its emphasis on data-driven decision-making, this book provides practical tools and techniques for accurately assessing and mitigating risks.
- Through engaging case studies and compelling arguments, it sheds light on the flaws in common risk management practices, making the topic more interesting and relevant.
Best quote from The Failure of Risk Management
Garbage times garbage is garbage squared.
—Douglas W. Hubbard
Who should read The Failure of Risk Management?
- Business owners and investors
- People interested in how risk can be accurately calculated
- Managers from all fields
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The Failure of Risk Management FAQs
What is the main message of The Failure of Risk Management?
The main message of The Failure of Risk Management is the critical flaws in traditional risk management methods.
How long does it take to read The Failure of Risk Management?
The reading time for The Failure of Risk Management varies depending on the reader's speed. The Blinkist summary can be read in just 15 minutes.
Is The Failure of Risk Management a good book? Is it worth reading?
The Failure of Risk Management is a worthwhile read for those interested in understanding the shortcomings of traditional risk management strategies.
Who is the author of The Failure of Risk Management?
The author of The Failure of Risk Management is Douglas W. Hubbard.
What to read after The Failure of Risk Management?
If you're wondering what to read next after The Failure of Risk Management, here are some recommendations we suggest:
- Strategic Risk Management by Campbell R. Harvey
- The Leader's Guide to Managing Risk by K. Scott Griffith
- Made to Stick by Chip Heath and Dan Heath
- Risk Savvy by Gerd Gigerenzer
- Workstyle by Lizzie Penny and Alex Hirst
- You Don't Need a Budget by Dana Miranda
- The Man Who Solved the Market by Gregory Zuckerman
- The Signal and the Noise by Nate Silver
- How To Live An Extraordinary Life by Anthony Pompliano
- Marriage Be Hard by Kevin and Melissa Fredericks