Foreword
Having been the head of the risk management department at Goldman Sachs for four years (which I sadly feel obligated to note was many years ago during a period when the firm was a highly respected private partnership), and having collaborated on a book called The Practice of Risk Management, I suppose it is not a surprise that I have a point of view about the topic of this book.
Thomas Coleman also brings a point of view to the topic of risk management, and it turns out for better or for worse, we agree. A central theme of this book is that “in reality risk management is as much the art of managing people, processes, and institutions as it is the science of measuring and quantifying risk.” I think he is absolutely correct.
This book's title also highlights an important distinction that is sometimes missed in large organizations. Risk measurement, per se, which is a task usually assigned to the “risk management” department, is in reality only one input to the risk management function. As Coleman elaborates, “Risk measurement tools...help one to understand current and past exposures, a valuable and necessary undertaking but clearly not sufficient for actually managing risk.” However, “The art of risk management” which he notes is squarely the responsibility of senior management, “is not just in responding to anticipated events, but in building a culture and organization that can respond to risk and withstand unanticipated events. In other words, risk management is about ...
