Haslett, Risk Management

Risk Management: Foundations for a Changing Financial World, edited by Walter V. “Bud” Haslett Jr. (Wiley, 2010), is part of the CFA Institute Investment Perspective Series, “a thematically organized compilation of high-quality content developed to address the needs of serious investment professionals.” This is the third volume in the series. It is a collection of fifty-three reprints from such sources as the AIMR Conference Proceedings and the Financial Analysts Journal. Most of the contributions predate the financial meltdown. But if not all the contributions are timely (although I suppose that in some sense classic papers are always timely), many of their authors are or were industry heavyweights. Just to mention a few: Fischer Black, Robert Merton, William Sharpe, John Bogle, Burton Malkiel, Emanuel Derman, Clifford Asness, Richard Bookstaber, Aswath Damodaran, and Andrew Lo.

This 797-page book is wide-ranging. The reader is introduced to such topics as value and risk, volatility and diversification, the uncorrelated return myth, risk management for hedge funds, managing geopolitical risks, behavioral risk, and regulating financial markets. It may not qualify as an “everything you ever wanted to know about risk management” book since it doesn’t delve very deeply into quantitative issues and since risk management is ever evolving, but it provides a solid foundation for professionals and students alike.

There is no way I can do justice to this book in a single post, so I’ve decided to select two articles I think might be of particular interest to readers of this blog, both with a somewhat philosophical bent, and summarize them in separate posts over the course of the next week.