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More Summer Risk Reading Recommendations

By Lisa Ward

7/26/2022

Last month, RMA offered suggestions for your summer risk reading list. You’ve probably burned through those books during the latest heat wave, so time for another trip to the risk library.

 

We spoke to three more authors about their favorite risk management books.

 

First up is Philippa Girling, chief impact officer at Varo Bank and RMA board member. Girling is the author of “Operational Risk Management: A Complete Guide for Banking and Fintech,” a practical guide for banks and fintechs that she describes as “really an A to Z of operational risk management.” Elements of operational risk, like risk and control self-assessments and capital calculations, are explained and supported with best practices and recent case studies.

The first book Girling recommends is “How to be an Antiracist” by Ibram X. Kendi.  “This book challenged me to take a hard look at assumptions I make about my own thinking and encouraged me to take responsibility for being a voice and an agent for change,” she said, adding the author effectively challenged her to keep working on being an antiracist and reminded her to be thoughtful of her own privilege in all aspects of work and life.

Girling’s second suggestion is “The GCHQ Puzzle Book: Pit Your Wits Against the People Who Cracked Enigma.”  The GCHQ - Britain’s Government Communication Headquarters -  provides intelligence to the UK’s armed forces, and this book provides tips on how to break codes and even provides puzzles ranging in difficulty. “This is no ordinary puzzle book,” Girling said.  The book is fiendishly difficult and requires readers to take leaps of faith, sweat every clue, and knuckle down to the hard work of solving complex problems.  “I find it both frustrating and humbling and yet I enjoy the challenges in this book immensely,” Girling said.  The spy training text taught her how to think in different ways and expanded her ability to approach complex situations calmly and methodically. A great exercise for every risk manager.

 

Next up is Richard Parsons, educator, banking veteran, and author of the RMA-published “Investing in Banks: Strategies and Statistics for Bankers, Directors, and Investors.” The book follows up his earlier work “Broke,” which analyzes why banks are prone to catastrophic cycles. “When I was at the tail end of writing 'Broke,' I realized that not all banks were prone to these cycles,” Parsons observed. His new book examines a group of banks that did well during the 2008 financial crisis and analyzes their success. Spoiler alert: The banks that did well tended to be smaller, wary of growing their loan base too quickly, and had executives that were often humble and very alert to industry risks.

 

Parsons’ summer suggestions include “Against the Gods: The Remarkable Story of Risk” by Peter Bernstein. The book gives an historical overview of how people have tried to conceptualize risk and probability. It begins in ancient Greece, moves to 17th century mathematicians, then focuses on more modern theories that often connect psychology to risk management. “It’s the best book ever written about risk,” according to Parsons, adding Bernstein describes important elements of risk analysis without getting bogged down in the details.

For his second recommendation, Parsons suggests “The Most Important Thing: Uncommon Sense for The Thoughtful Investor” by Howard Marks, co-founder of Oaktree Capital Management, a fund focusing on distressed securities. The book builds upon memos Marks wrote to his investors over time. “What is clever about the book is that there is no one most important thing, rather there are many important things,” said Parsons. That said, one of the key takeaways from this book is Marks’ urging of investors to be aware of extremes and unusual or unsustainable behaviors, and remember that markets often regress to the mean or historical average.

 

RMA also spoke with Dean Yoost, author of the RMA book “A Director's Voyage Through Risk Management.” Yoost’s book is designed to help board directors think about risk by giving them a general overview of risk management and primers on key topics, like risk in emerging markets or the implication of an aging population. There are even lists of relevant questions board members could ask about key topics covered in the book.  

 

Yoost recommends RMA Members check out “CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest” by Carolyn Dewar, Scott Keller, and Vikram Malhotra. The book offers insights gleaned from interviews with 67 successful CEOs, including JPMorgan Chase & Co.’s Jamie Dimon and Netflix’s Reed Hastings, to better understand what makes a successful leader. For Yoost, the book can help risk managers build their leadership skills and establish trust within their organizations, including at the board level. “Success often depends on leadership, not management,” Yoost says.

Yoost also suggests “Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail” by Ray Dalio. The book discusses the rise and fall of the British and Dutch empires using macroeconomic insights, like a country’s ability to balance its budget or its willingness to take on a lot of debt, to predict the fall of the U.S. and the rise of China. “The book tries to predict the impact of a changing world order,” said Yoost.

 

There is still plenty of summer left. So find some cool shade and take a risk on these reading recommendations! And if you have other book suggestions, please send them our way!