Preface
I started writing this book in early 2008, well before the most serious period of the financial crisis. The original plan was to turn in my manuscript in December but, as the economic crisis developed, the publisher saw that a book about the failure of risk management might become more relevant to many readers. So, at my editor’s urging, instead of writing a 50,000-word manuscript due by December, I wrote an 80,000-word manuscript by the end of October.
Although the financial crisis becomes an important backdrop for a book about risk management, I still wanted to write a much broader book than a reaction to the most recent disaster. This book should be just as relevant after the next big natural disaster, major product safety recall, or catastrophic industrial accident. Better yet, I hope readers see this book as a resource they need before those events occur. Risk management that simply reacts to yesterday’s news is not risk management at all.
I addressed risk in my first book, How to Measure Anything: Finding the Value of Intangibles in Business. Risk struck me as one of those items that is consistently perceived as an intangible by management. In a way, they are right. A risk that something could occur—the probability of some future event—is not tangible in the same way as progress on a construction proj ect or the output of a power plant. But it is every bit as measurable. Two entire chapters in the first book focused just on the measurement of uncertainty and risks. ...