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The book is divided into five distinct parts: Part I (ERM in Context): The
chapters in this part of the book set the context in which ERM is increasingly becoming a way of life in many businesses. The author provides details about the regulatory developments in the UK and US in areas of corporate governance and discusses how ERM is linked to corporate governance standards.
in ERM, covering analysis of business, identification of risks, assessment of risks, evaluation of risks, detailed planning and risk management. The various chapters in this part of the book provide simple techniques and tools (e.g. various ratios, risk registers, project appraisal tools, probability trees, decision trees etc.), that can be used at different stages of ERM. The Author has also structured the various chapters under this part of the book in a consistent manner, setting out the inputs (what is required as input under each stage), constraints (what are the applicable constraints), mechanisms (what is required to be done) and outputs (what would be output after completing each of the tasks) under each of the ERM tasks in a pictorial manner.
ecently, I had the opportunity to read this book, authored by Dr. Robert Chapman. The author is a PhD in risk management from Reading University and currently works as a consultant with Insight Consulting (part of Siemens Communications). He has worked in the risk management area for several years, providing consulting support to many industries. I must confess, the title of the book simple tools and techniques in ERM did scare me initially! This is because in many such books, the simple tools are never so simple to understand (especially for a non-technical person such as me)! However, as I progressed with reading the book, I realized that not only the tools and techniques covered by Dr. Chapman are simple and practical to implement, they are also presented in a language that is easy to follow.
chapters in this section provide the processes, checklists and practical tools that can be adopted at various stages of companies and the ERM consultants working together. These cover stages such as engagement of consultants (e.g. tender process), submission of proposals by consultants, evaluation of proposals by companies, implementation of solutions, post-assignment reviews etc. reminding me of the processes, tools I use (or should use!) as a consultant on a daily basis. It provides a good repository of the detailed processes, tools, templates etc.
Process): I gained the most out of this part of the book. It clearly sets out the different tasks
- Micro Factors) and Part V (External Influences - Macro Factors): This part of the book discusses the various risks faced by companies. These risks are categorized as internal (Financial, Operational and Technological) and external (such as Economic, Environmental, Legal, Political, Market and Social). Again, this part of the book provides a good repository of the various risks that companies may be faced with and how they can be managed.
The Actuary India July 2011 27
BOOK REVIEW
Mark your dates 14th Global Conference of Actuaries, 19th 21st February, 2012 in Mumbai
BOOK REVIEW
Mark your dates 14th Global Conference of Actuaries, 19th 21st February, 2012 in Mumbai
Apart from the tools and techniques covered in the book, I found some good quotable quotes: wealth maximization is a long term objective but often due to the failure to respond to many different types of interdependent risk over a short period of time Overall, I found the book to be a good repository of the processes, techniques and tools that can be used in setting up the risk management systems in all types of businesses.
management as just a compliance issue expose themselves to nursing a damaged balance sheet term objective, whereas
aspects of risk management are preparation, preparation and preparation always driven by a failure to respond adequately to a single category of risk failure