Business-risk

This collection of seven essays taken from the _J._of_Risk_and_Uncertainty_, defends the rather self-evident notion that increased regulation does not automatically benefit the public. Rather, the essays provide mortality comparisons, coupled with statistical data to evaluate the impact of regulatory distortion in the economy.

Some terminology in these essays could have benefited from clearer definitions. In fairness, the essays are gleaned from a specialized journal geared to a narrow audience. Nonetheless, a glossary to distinguish between risk-risk analysis, health-health analysis, benefit-cost analysis and cost-effectiveness analysis used to evaluate comparative risks would have been helpful. Even the Lutter/Morrall essay, which distinguished willingness-to-spend and willingness-to-pay, was replete with acronyms. Unexpectedly, the Viscusi/Zeckhauser essay used italicized characters for vectors and matrices rather than bold typeface (contrary to its usual representation in mathematics), but also presented what for me was a novel idea of comparing industries not solely on the fatalities resulting from their operations, but also on the fatalities related to input and output. For example, power generation may be relatively safe, but the coal burned must be provided from the mining industry, which is much more hazardous. The reader may develop an agreeable or skeptical reaction depending on the reasonableness of the data. The numbers, at first glance, do not strain credulity, although a more thorough understanding of sources for data might lend more confidence. However, I remain unconvinced of the economic comparison between injuries and fatalities, not because of the assertion that injuries have a greater aggregate economic effect than fatalities but because the societal concern that death may present a far more severe disruption in a household than a much larger number of recoverable minor injuries to many families. This represents a social decision to establish a higher priority on preventing accidental death than in avoiding morbidity based on acceptable norms established by informal consensus. That this may result in economic inefficiency does not seem sufficient reason to abandon such priorities.

The most rewarding essay for myself was by Keeney on mortality risks. Keeney illustrated the hazards to ordinary people (as opposed to bureaucrats who may benefit from increased regulation) of regulation-induced cost increases that may cause increased unemployment or reduced purchasing power. People must then prioritize purchases with fewer economic resources -- and so decisions such as driving on bald tires may increase risk as a consequence of having less money to purchase new ones. The hypothetical example presented might have been amusing but for the inanity of power seekers: a requirement that all individuals in automobiles wear a motorcycle-style helmet. A few might survive otherwise fatal accidents. Others might suffer collisions due to degraded hearing or vision while driving. The helmet industry would temporarily surge, at the expense of other industries that would suffer eroded customer purchasing power. Keeney pointed out that the consequences of an industry failing from regulatory burden are imposed on a small segment -- those employed in the industry. Thus socialization of risk may be reversed, allegedly benefiting many at the expense of a few: a risk allocation scheme by a tyranny of the majority. This disproportionate effect is further described in Portney/Stavins. In another essay, the claim that wealth and increased longevity being statistically linked may indicate a causal connection was asserted by Chapman/Hariharan.

While the prose seems dense at times, most of the arguments are competently presented. Knee-jerk big-government liberals unlikely to find much appealing in this slim volume, but CATO institute members may be attracted to the rather dry but salient arguments made therein.

I have decided to integrate my interview with Keld (Co-author) and book review together because the book also emphasises the strengths and ideals of Keld's company Market Watch.

From the back jacket of the book "An international study based on over 20,000 negotiations revealed that a huge amount of time is wasted on producing deals that are often of only marginal merit. This book will help you identify the deals which are worth doing and set you on the right track to make them profitable.

Negotiating Partnerships will take you through dozens of areas where additional value can be found, to make win-win partnership deals that really work for you. You will learn how to identify opportunities and conclude better deals at the same time as making the other party feel good."

The book has definitely made good its promises.

My favourite bits:

Good and Bad Negotiators (Chapter 2), Checklist (pg 63) - These are set out in a very clear manner

Added Value and 4-Step Model (Chapter 5) - My last foray with the term Added Value was while lecturing Macroeconomics! Yet again, the authors expertly highlight these concepts in very workable fashion.

The back Appendix 1 and 2 are also good guidepost to accelerate your application of these models.

This book is authoritative and highlight the experience of the authors. It is essential reading for HR, Management and Corporate Strategists.

A very good business book!

Colin Ong TS
Founder/Managing Director

MR=MC Consulting
http://www.mrmc.com.sg
http://www.mrmc.com.sg/12n

I found Tremper and Kostin's book on the topic of risk managment when dealing with volunteers in non-profit organizations, very helpful and thought provoking. When making the decision to include volunteers in a workplace, the topic of risk managment is often not investigated at any length. The goal of risk management is to improve performance by acknowledging and controlling risks, something every organization needs to take the time to consider. Risk management can increase an organizations ability to avoid unpleasant surprises that can occur in a volunteer program and help that organization take control of the risks that can not be avoided.

Part I of this book presents key concepts and develops a stategy for integrating risk management into every aspect of a volunteer program. Part II offers practical suggestions for controlling risks in a dozen areas of volunteer program management from policy and procedure to transportation. Temper and Kostin systematically consider many of the pitfalls and problems that can be encountered using a volunteer program, and give articulate and well thought out advice on how they can be avoided. I found the worst case scenarios that were presented with points on how to deal with them most helpful.

Thanks to this insightful book a coordinator can do much to protect a volunteer program from risks at its inception. This can only enhance a programs chances for success. I highly recommend this book for anyone contemplating the use of volunteers in their organization.

I first heard Joel Cassaway over ten years ago in Orlando when he was a lecturer and investment trainer for a popular real estate seminar company. Joel packs a lot of information, is fun to listen to too and a excellent trainer.Joel discussed discounted mortgages. I followed his advice and netted a 150% return!What more can I say? This guy knows his stuff.

Throughout the 80's and the early '90s, a deeply ingrained myth existed in the American collective psyche that believed that; Japanese corporations, in collusion with Japanese government were bent over to control the US and world economy. A series of economic events further encouraged and fortified this belief. Among these events were financial success of Japanese corporations during a contractionary period in the US, followed by a series of acquisition of US companies by Japanese including some national cultural icons, the ever burgeoning US trade deficit and National debt, and the consistent complaint of US business leaders about the un-receptiveness of the Japanese economy to outside competition and acquisition. W.C Kester, attempts to answer few fundamental questions relevant to the Japanese M&A activity. The questions he attempts to answer include; Should nations be threatened by Japanese M&A activity? Should the Japanese be more proactive in opening up their system so that others gain access to M&A activity in Japan? What should policy makers and policy makers of other countries do about the issues? The search for these answers leads him into a complete analysis of the Japanese corporate governance system, which he defines as "the overall mechanism that coordinates the activities of Japanese corporation's various stakeholders such as lenders, shareholders, managers, employee, suppliers and customers". Through a historical case study of a company, he demonstrates how this system has evolved separate from the western culture and in the process enmeshed and optimized itself to and with the Japanese culture. He then discusses primary factors of this corporate governance mechanism which are; implicit contracting based on trust; reciprocal shareholding and implicit trading agreements between stakeholders; Management incentives based on overall growth rather than transfer of value between stakeholders and; Financial institutions as stakeholders and their early, selective power of active intervention. It becomes obvious to the reader, how an interwoven structure such as this makes redundant the need to acquire each other while; layers of cultural barriers make the system impermeable to foreign acquirers. The time series/case approach of the first part of the book puts the reader in touch with the origin and the reason behind the Japanese corporate culture. The subsequent few chapters use cases to demonstrate the amicable nature of mergers between Japanese companies; a characteristic that crosses borders when Japanese companies merge with foreign companies. The book then shifts to what the future of Japanese corporate governance will evolve to. Driving factors such as scarcity of growth opportunities, widening objectives among stakeholders, primarily between lenders and managers and, the increase in the inflow of global capital with differing objectives than the existing culture as three primary reasons for future trend changing forces. Greenmailing is a result of the conflict between efficiency concerned financial institutions and cash rich corporations who have been less needy of banks. Buttressed by financial deregulation, international trading and indeed Japan's very success; ensuing Global flow of capital has forced Japanese financial institutions to compete by international standards of capital. Thus, capital is setting Japan's future trend and is demanding shorter term and higher returns. As this happens other stakeholder relationships will have to be redefined; especially the company employee lifetime employment relationship will be challenged. The book was written in 1991 and was forecasting future trends. Off course reviewing this book in 2000, gives us the advantage of assessing the forecasted trends. So much has changed to the Japanese economy since then. Some of the large financial institutions were liquidated and or were acquired by foreign companies. Lifetime employment has become a thing of the past. The system so heralded as the most in the '80s and early '90's has been forced to go into major restructuring. The after effects of the shock still subside. A nation so used to permanent job security, faced with the unfolding events has grown so pessimistic as to drastically curtail consumption thus propelling the economy to an extended period of recession.

The author has attempted to integrate the investment concepts, like resource perception, risk perception and etc among the depressed or manic people. Such concepts has broadened the reader about the future perception and related cognitive biases in the mood disorder. However, the direct integration into practical intervention still needs more exploration in future.

The book provides a delightful insight into the intricate world of balancing the trade-off between risk management and higher returns. This book is meant for those either alreday in the industry or those that have a strong interest in the day to day management of large funds. A glimpse of the authors in the book would please any academician -- MIT, Harvards, Stanfords, PhD's, CFA's... The content is varied and at the cutting edge of asset management -- a must read for any interested in an academic, risk managed approach to the world of asset management. Higher returns are not guaranteed, and the book will be too complex for many, but for those with some background it's a worthwhile splurge.

Our organization is making a transition from reinsurance only to providing risk management services. This transition has posed many challenges, including training of our employees. This text has provided us a readable reference for employees to learn more about risk and risk management. Reviews from our staff are good.

We used the book for RCM study at work place

A very well 1995 - book on expected utility theory by the Belgian - French authors Eeckhoudt and Gollier (English translation by Lambson). The authors explain the difficult theory and its implications on expected utility in an extremely clear manner. Notions such as certainty equivalency, risk premium, measures of risk aversion are introduced to the reader in a relaxed setting and logical order (I have seen this different in other books on utility theory). Some of the exercises throughout the book contain valuable information. For instance, I was happily surprised to see the relationship of asking - and bid prices with the willingness to pay for the reduction in the probability of an accident (WTP). (See also Jones-Lee, The Economics of Safety and Physical Risk, 1989).

Risk, evaluation, management and sharing consists of three parts: 1. The evaluation of risk situations, 2. Individual choices under uncertainty, 3. Markets for uncertainty. Part 2 shows the usefulness of the concepts of Part 1 in the context of micro economic theory to determine the supplies and demands of economic agents in an uncertain world (by maximising their expected utilities). Part 3 investigates the system's risks in equilibrium and how risks should be shared. The complete markets model and CAPM are analysed. The book ends with a very interesting chapter on asymmetric information which abandons the assumption that everyone should have the same information in the economic theory of uncertainty.

The book has a foreword by the famous Prof. John Pratt (Harvard University), who is also thrilled about this book (proved by the fact that he normally doesn't like to write forewords in books). The preface is by Dr Denis Kessler (president of the French Federation of Insurance Companies).

The book contains a large amount of references, many of them to the roots of (non-)expected utility theory. As a Dutch researcher on safety of flood defences, it is always nice to see citations to for instance people as Maurice Allais, Nobel laureate in economics, who spoke the historical words at the opening address of the 1st International conference on Foundations of Utility and Risk Theory in Oslo (June, 1982) "If for instance the problem is to determine the height of Dutch dykes, what is the optimum solution in the light of the frequency distribution of the height of tides, the cost of different heights of dykes, the probability of being insufficient some day, and the perceived utility of dykes as an instrument of safety in relation to their cost?".

The book was presented to me at the FUR conference in Mons some years ago. I regret that I only had now the time to read this wonderful book...