Engineering-risk Books

The reduced form and structural credit models have been the most popular ones for the pricing of credit sensitive securities and for the estimation of default probabilities and are clearly discussed in this book, along with many other topics of interest to those responsible for the mathematical modeling of credit risk and/or interest rates. The book can be read by anyone with a background in the theory of stochastic processes and those interested in mathematical finance as applied to credit risk will find the book interesting. Only Part I of this book was read by this reviewer.

In order to price a credit sensitive security one needs to be able to calculate default probabilities and be able to construct models of the risk-free interest rate and the recovery rates. One will also need to model the risk premium that investors will require when entering into a credit risk agreement. Lastly, one will need to model the correlations between defaults in the entities that make up a portfolio.

In the structural models of credit, the modeler assumes certain information on the time-dependence of the assets of a firm and its capital structure, and one thinks of the liabilities of the firm as an option on the assets of the firm. In a reduced form model, the time dependence of default is taken to be dependent on exogenous factors via a default rate, and the price of the credit security is calculated using an interest rate modulated by this default rate.

The most well known structural model is the Merton model, which introduced early on in this book, and wherein corporate liabilities are taken to be contingent claims on the assets of a firm. Credit risk arises solely from the uncertainty regarding the market value of the firm. Default probabilities are calculated by assuming that the value of the firm's assets over time is governed by geometric Brownian motion (the authors call this Ito dynamics in this book). Now if the firm has a market value of V (representing the expected discounted future cash flows of the firm), and assuming that the firm is financed by equity and a zero coupon bond with face value F and maturity date T, then taking default to mean that V falls below F, the probability of such a default can be expressed in terms of the standard normal distribution function. The authors show this explicitly in chapter three of the book, and this derivation is of no surprise to those familiar with standard (Black-Scholes) options theory. The payoff for the investors is then equivalent to that of a portfolio consisting of a default-free bond with face value F maturing at T and a European put option on the assets of the firm with strike price F and maturity T. The authors also consider the value of the equity, which is equivalent to the payoff of a European call option on the assets of the firm with strike price F and maturity T. They also show, interestingly, that the values for the equity and the debt depend on the leverage ratio of the firm, but that their sum does not, the latter of which is taken to be an assumption in the Merton model. The market value of the firm is thus independent of its leverage. Defining the credit spread as the difference between the yield on a defaultable bond and the yield on an equivalent default-free zero bond, the authors derive an explicit expression for this quantity.

In a reduced-form model, the default dynamics is prescribed exogenously using a default rate or intensity, and the question now is how to calibrate the intensity to market prices, rather than being concerned with firm default. The default process is actually a jump process, with a jump of size one at default, and has an upward trend. Using standard results from the theory of stochastic processes, the upward trend can be compensated for, with the result that the default time will become unpredictable. In contrast to structural models, the default losses in reduced-form models are expressed in terms of the expected reduction in market value that occurs at default. As in most theories of pricing in the theory of contingent claims, use is made of the concept of a `risk-neutral measure' in reduced-form models. If one thinks of this measure in terms of an arbitrage-free market, then it is straightforward to understand: it is a probability measure in which the present price of a contingent claim is equal to the expected value the future payoff discounted at the risk-free rate. Such a measure is also called an `equivalent martingale measure' in the literature on financial modeling. Given the hazard rate for default at any time and the expected fractional loss in market value if there is a default at this time, then in one of these reduced-form models, called the Duffie-Singleton model, the contingent claim can be priced as if it were default-free. This is done by replaced the short-term interest rate with a default-adjusted short-rate process, called the `risk-neutral mean-loss rate' due to default. The risk-neutral mean-loss rate can be written as the sum of a short-term rate and a credit risk premium, and is time-dependent. Most interesting is that using this rate, one can price the claim as if it were riskless. The present value of the contingent claim is then obtained by discounting using the adjusted short rate, and takes into account the probability and time of default, and the effect of losses on default.

The authors devote a fair amount of pages on the Duffie-Singleton model, the crucial idea of course being the identification of the credit risk premium. The model concentrates on three variables, namely a risk-neutral probability of default at time t on a short time interval that is conditional on no prior default up to t, a `recovery' amount measured in dollars if there is a default at time t, and the riskfree short-term interest rate at t. The market value of the claim at time t can be written as the sum of the present value of receiving the recovery amount (at t + 1) if default occurs, or the market value (at t + 1) otherwise. The challenge lies in calculating this sum since the three variables are entangled. The strategy for dealing with this is to use what Duffie and Singleton called a `recovery-of-market-value' or RMV. The recovery amount is taken to be a fraction of the market value of the contract, and inserting this in the sum allows it to be greatly simplified, as the authors show. Assuming a continuous-time framework, they write the risk-neutral mean-loss rate and the claim in terms of an underlying state variable that obeys a stochastic Weiner process, and using the Feynman-Kac formula show that the price at time zero satisfies a backward Kolmogorov partial differential equation. This is then generalized to the case where the underlying variable follows a jump-diffusion process.

This is easily the best credit risk book there is! It is the only book that covers all the theories available. It is well written and covers both the maths and the intuitions. It is up to date too. While the book targets sophisticated readers, it covers more of the ground than any other book I have seen around (and goes much more in depth than any competitor). It is great to finally have a book that goes through the maze of the theories on credit risk.

I enjoyed this book. It goes over many of the credit risk theories that I had only heard of or skimmed through before. The presentation is very clear and successful. Some typos at the beginning of the book are too bad but the errata on the author's web site is useful, especially for the chapter on Merton. The book seems very complete and very detailed, much more than the other books around. A very useful addition, especially with the available errata for the typos concentrated at the beginning. I believe our current credit risk systems are so out of date with the advanced theories as presented in the book... Things will change...

The recent developments in credit-risk analysis have been highly quantitative and theoretical. Hugues Pirotte & Didier Cossin provide a comprehensive overview of the most popular credit risk models. Their purpose is to allow practitioners to apply quantitative modeling to this complex area. I think that it is a quite good book: easy to read, clear for most of its explanations but I found too many mistakes in mathematical formulas. The editor could have been more careful with the reader's comfort. On the downside: the chapter on swap credit risk (a model from the authors) is so pretentious that it becomes very irritating and actually damages the quality of the book. In addition, no disk with source code!

The book does a good job in presenting some credit risk models, although it is far from being exhaustive. However, if you are looking for technical details, you best bets are still the original published papers, given the numerous typos. My suggestion: wait for the revised edition!

I bought this book to give myself a thorough education on derivatives. And, I got it. It is very readable, yet it covers all the topics in adequate technical detail, so you can hold your own in the company of derivatives traders and the like. I often refer to this book, to refresh my memory on the different structure of option models, or how to value an interest rate swap. This is the sort of stuff you will not remember unless you use these concepts on a weekly basis. But, with this book, it does not matter, it is easy to refresh your knowledge.

I also use this book as part of the Masters course in Sydney and I cannot remember the last time I picked it up to read as I have better things to do with my time than try and work through the glaring errors in formulae, graphs and general commentary. The presentation is verbose and circumlocutory and to add to the frustration often wrong. I feel obliged to warn potential buyers not to make the same mistake that I have. Gallitz on Financial Engineering is a far more interesting and accurate text and for the rigours of applied financial maths Mastering financial calculations teaches you more in 200 pages than Smithson could in a lifetime of trying to improve on this first edition. If anyone would like my copy of Smithson I'm happy to give it away for fear further sales may encourage McGraw Hill to continue publishing the book.

The book is written in a complex way. For example, a simple future contract, was explained in long and complex way. It is not able to show the point directly. Anyway, it is not a bad point. It has some quite excellent practical example. It is the most valuable parts of the book.

I had to buy this book as it was the text book for one of the subjects that I am studying.

Dated: e.g. Many examples that deal with European currencies that were replaced by the Euro.

Errors: In the illustrations, there are some calculations that take incorrect parameters to derive the results (obviously yielding wrong results). This is misleading and time consuming.

Verbosity: The book explains in twenty pages something that can be explained in five.

No good.

For those of you who may not be aware, Charles Smithson is the "father" of the building-block approach to making derivatives understandable, showing a linked, family-tree approach, rather than each explaining each one separately with no clear connections. He is both a top practitioner with many years of senior-level experience, as well as an academic for more theoretical work.

I am amazed at some of the negative reviews. I can only think that is because there aren't enough partial differential equations and complex pricing/hedging models (there really aren't any, but that doesn't make this a simplistic book). I also teach finance at the Masters level, as well as teaching practical applications of derivatives to various bank clients.

In my oppinion, this is the single best book on derivatives for non-specialists that I have seen (and I have seen most of the derivatives books around). Even people on the trading floor would benefit from the clear forest-for-the-trees approach. This is not an easy book, though it doesn't require any more than school algebra (with the exeption of one chapter on option pricing, contributed by Cliff Smith and, even there, the calculus could be skipped over lightly). This book will give the reader a very good understanding of the most important aspects of derivatives and their applications. This is something that is often woefully lacking in banks, where the focus is on the minutiae of quantitative models, treated almost as an exercise in math, without a very clear understanding of the finance that the math is there to model. The treatment is broad and balanced, from pure product knowledge to issuer applications to investor applications and to banks managing their own market risk. This breadth is very rare in derivatives books.

My only criticisms are that there are some mistakes (as in most technical books that are not textbooks, benefiting from the review of many students, if you look hard enough for them) and there is insufficient emphasis now on credit derivatives and the management of credit risk, though I feel sure Charles Smithson will address that in the next edition - he has written a separate book "Credit Portfolio Management."

Perhaps someone should take up the offer of a free copy from a previous reviewer - a real "free lunch." I highly recommend this book to relative beginners, as well as to experienced practitioners who want more breadth.

Y2K is gonna be here any second now. Remember, folks, just because nothing happened doesn't mean that nothing is gonna happen. Ed Yourdon is a bona-fide computer expert, not just some formerly-respected expert who gave up all semblences of respectability and credability in the aim of getting his name on the lips of every preparedness wacko on shortwave!

By the way, does anyone wanna buy 500 cans of spam?

For the title of your sequel, I suggest "the rise and resurrection of the Y2K bug"

"The definitive guide for moderate to extensive Year 2000 preparations by best-selling author Edward Yourdon. Covers all angles of Y2K preparation from food to heating to PCs to finances to communication. A must have for any family preparing for Y2K. Highly recommended." Westergaard Year 200 Newsletter

"Whether you plan to prepare for days, weeks or months-this is the book to get. Yourdon and Roskind have done a great job in making Y2K preparation understandable and affordable." Dr. Leon Kappelman, author of "The Year 2000 Problem" and Co-chair, Year 2000 working group, Society for Information Management (SIM)

"One of the better preparation guides...4 star rating" Y2K News Magazine, April 16

This book really disappointed me it really did'nt have anything that jumped out at me, that made me say "O - I forgot about this" maybe because I'm a SysAdmin I might be more up to date than most. If your lacking common sense then buy this book, but with 30 days or so till 2000 its almost a mute point now.

This companion book to 'Time Bomb 2000' was somewhat disappointing. Right in the introduction, there is a chart of things to do 'on New Years Eve day (or before)'. According to 'Time Bomb 2000', some of these things might not be possible by then.

Each chapter deals with a major issues such as food, water or light. The comparisons of the options are good as are the storage hints, but quantitization (how much to get) is often glossed over. The checklists are useful to avoid forgetting something, but are not the most practical means to monitor your state of preparation.

The section on Money and Finances is particularly superficial.

The lists of books and web sites are just lists, and of limited usefulness. The videos section does have a brief blurb about each video. There is also a list of Y2K community groups which might be of use if you happen to be located nearby any listed.

If you have a large Y2K library, this might be a useful element of your library. If you are looking for 'one' book on preparation, this is probably not it.

Risk Management and Derivatives by Rene Stulz is a pioneering book into the need, value, and how to of corporate risk management. Rene Stulz is one of the leaders in this area of finance and has researched and studied it over many years, he is one of the leading experts in the understanding and managing of firm risk. The book motivates the subject by presenting existing and new arguments for the use of risk management by corporations. The book is designed to prepare current and future managers and executives for the world and value of derivatives. To assist the reader, learning objectives are presented at the beginning of each chapter. Many books approach the subject in a very technical or overly simplistic method to the use of derivatives to manage a firms risk, this book gives enough detail for a good understanding and use of derivatives for managing a firm's risk but is not to technical for the non-derivatives expert. All necessary quantitative background is provided in the book.

The book begins by discussing derivatives and how they are used to manage risks. It then goes on to look at the value of risk management from the investor as well as the firms viewpoint. The book then examines the basic derivatives tools used for managing risk, including forwards, futures and options. To help the manager in the use of these instruments the book uses many real world examples and discusses the identification and measurement of exposures. To help the reader understand the use and value of the most commonly used derivatives instruments, the author discusses their use and even explains the pricing of options using the Black-Scholes as well as the binomial pricing models. There is even a chapter on interest rate risk, which is the must common risk that is hedged. In the last several chapters of the book, the author goes beyond the basics and discusses more advanced risk management tools and instruments along with a chapter on swaps, which is a fast growing and flexible tool for hedging interest and exchange rate risks. The book concludes with an extensive discussion of the practice of risk management that examines the recent academic studies and predictions of the future of this valuable and growing field.

If you are interested in risk management or are a manager that is interested in increasing firm value and reducing risk, then this is a must read. This book is the state of the art in this exciting area of finance and is written by one of its leading pioneers.

This book was assigned reading for an MBA course I took in risk management. It is horrible. As mentioned in an earlier review, the author explains the fundamental equations and ensuing examples all in words, almost as if it were meant to be an audio book. I have a PhD in one of the physical sciences and usually tear through and get a lot out of finance books. Not this one.

The table of contents makes this text look wonderful. In reality, this book is sad - although every chapter is about something important, it wastes 50 pages to ramble about something that could be covered succintly in half that. The organization of relevant maths is also extremely disappointing. I suspect one of the glowing reviews was by someone who hasn't actually read it - it sounds more like publisher's marketing.
I expected far more.

This is one of the best books I ever had. Being able to understand every detail is not easy , but the author does a great job in bringing mathematical concepts with an application perspectives

Do not buy this book. It's one of the most poorly written book i've ever read. The author likes to use long winded sentenses to explain simple concepts and he does a piss poor job at it. In addition, this book lack quality example problems to help you learn the concepts. When there are examples, they are deeply burried in text rather than clearly shown in a designated area. Imagine an algebra or calculus book with examples explained in text rather than numbers. (.i.e two plus two equals four ... as opposed to 2+2=4) This is how bad this book is. This book is not worth the money. The only way that it's worth the price I paid is if I get a chance to throw it that the author.

If anyone out there know of a well written risk management book, please let me know. I'd greatly appreciate it.

I have encountered feelings about this book. I liked that it relates corporate finance topics with risk management, giving a better picture of how finance should be understood. I definitely agree that it is full of very valuable insights that increase our knowledge and understanding of finance and risk management. Some of my impressions about the book are:

-The book is sometimes easy to follow, but many times it is very difficult to follow.
-Many difficult parts to follow were unnecessarily complicated by the author.
-Many times the book didn't follow clearly an idea, as if each following sentence or paragraph was written by different people with something different in his mind each.
-Many times it used several lines and paragraphs to explain something simple that could be stated in one sentence.
-Some topics were explained very clearly but others were dreadfully explained.
-Some numeric examples were clear and some were very difficult to follow

My opinion is that you should look for another book on the subject; unfortunately I cannot give an advice about an alternative book.

Anyway, before reading this book you should have a good understanding about the CAPM, derivatives (futures, forwards, options), and basic probability.

This book could become a great book if the author took the time to improve its readability and coherence, because it has very valuable knowledge embedded in it.

It's an unfortunate empirical observation that many large software projects fail. Why this happens, and how it can be avoided is the subject of the text. The author looks at several abandoned projects, for which solid information has been made publicly known. These include the Denver airport's baggage handling, and the IRS Tax System Modernisation. Though surely many other failures have been quietly buried by other groups.

The author finds that often, constraints, schedules or goals were placed outside the influence of the developers. While this does not pre-ordain failure, it seems to significantly increase its possibility. Another characteristic trait seems to be a lack of executive oversight. Leading to project drift, until that becomes irreversible.

The book's best help to you might be when you are starting a project.

Here's a two-ingredient recipe for disaster: take a big organization and mix in ambitious plans for a state-of-the-art software system. The disaster already happened at the IRS and Denver International Airport, both victims of software development missteps. Such failures are common, costly and all-too-avoidable, writes academic Kweku Ewusi-Mensah. While his prose can be dry, the examples he uses prove quite juicy. A little common sense could have saved the IRS billions and the Denver airport millions. Both fell victim to surprisingly basic pitfalls, such as unclear or unrealistic goals and over optimistic expectations that inexperienced people could get the job done. Ewusi-Mensah convincingly argues that organizations need to share such learning experiences, although he acknowledges that would mark a reversal from common practice. We recommend this book to managers and engineers involved in developing software. This cautionary tale could save your neck.

Here's a two-ingredient recipe for disaster: take a big organization and mix in ambitious plans for a state-of-the-art software system. The disaster already happened at the IRS and Denver International Airport, both victims of software development missteps. Such failures are common, costly and all-too-avoidable, writes academic Kweku Ewusi-Mensah. While his prose can be dry, the examples he uses prove quite juicy. A little common sense could have saved the IRS billions and the Denver airport millions. Both fell victim to surprisingly basic pitfalls, such as unclear or unrealistic goals and over optimistic expectations that inexperienced people could get the job done. Ewusi-Mensah convincingly argues that organizations need to share such learning experiences, although he acknowledges that would mark a reversal from common practice. We recommend this book to managers and engineers involved in developing software. This cautionary tale could save your neck.

unfortunately this book does not deliver what it promisses. neither i find any theoretical in-depth analysis of specific software project failures nor reasonable checklists to guide practioners. instead, many common places that do not add value compared to the publications on the topic so far (Boehm, Jones, etc.).
it does not help that the book fails to describe the problems that make specifically software projects so hard to manage. see the freely available NATO software engineering conference papers from 1968 for more helpful information on software project failures.

Software development failures, depending on how you count, may outnumber the successes. Nearly a third of software projects are simply scrapped before completion. That waste may account for as much as US$85 billion, approaching 1% of the US gross domestic product. This topic is critical, in a world where everything, down to the pacemaker in a patient's chest, is driven by software.

A topic so important deserves a more stirring author than Ewusi-Mensah. I found this book dry, repetitive, and poorly organized. The book centers on a handful of case studies. Those case studies are barely mentioned until chapter four, though. Even then, I found it hard to follow the examples. The author does not present the samples one at a time, in their entirety, though. Instead, he presents one aspect of all five examples, then another facet of all five, and so on. Only in chapter seven, when the book is winding down, do I really see any depth in any of the case studies. Even then, just one is covered in any detail.

Ewusi-Mensah rightly describes the "code of silence" surrounding software project failure. His description the phenomenom seems shallow, though. Bruised egos and painful memories may well be part of the reason that failures get so little mention. Software training and practice may have more to do with the tendency to ignore failure, though. In every other field of engineering, practioners rely on knowing yield strengths and "absolute maximum" ratings of their parts and materials. The idea of failure is central to the practice, even to the legalities and forensics, of those fields. Programmers, though, are barely ever shown good examples of their craft, let alone bad examples. Management, design, and project control of software are even more ethereal - there simply is no common set of terms in which the failure can be described.

Petroski's writings show that engineering failures can be described in informative, constructive ways. Perhaps this book's target is more difficult - it discusses not the failures of the software itself, so much as failures in the process by which software is built. Perhaps, too, not every author can be a Petroski. Maybe the academic treatment really is more appropriate to this topic. If so, I would hope for an author who cites more of the field's literature and cites less of his own prior work.

"Managing Energy Risk" gave me the information I needed to answer technical questions about energy risk in an actual job interview. My answers must have been good because I was offered and happily accepted an energy risk management position! This is a great introduction and summary of energy risk management, which I believe was intended for managers and others like myself who just want a thorough overview. Several technical concepts are discussed in this book, but the author leaves the gory details for other sources. Among other things this book covers: 1) the current status of the electric power industry and a brief historical perspective, 2) risk management policies and procedures, 3) the different players involved in energy risk management, and 4) the foundations, basics, and some of the peculiarities of energy risk management. I recommend this book to anyone looking for a solid foundation in energy risk management.

Patronizing style and too many mentions of his wife's book. Poor content - give it a miss.

Managing Energy Risk: A Nontechnical Guide to Markets and Trading serves as a wonderful overview of the critical issues surrounding risk management operations. Although it does not replace an in-depth discussion of financial instruments found in a traditional finance textbook, the author does not intend it to do so. Instead, the book provides an introduction to financial instruments but offers a much broader perspective of risk management. It covers topics such as the trend towards market pricing in the electric power markets, the importance of having clear risk management policies and procedures, and the overall deal process. It is an excellent read for anyone interested in having a "big picture" understanding of risk management operations.

This text offers absolutely nothing. It is either far too simplistic or misses chunks of valuable detail.

There are far better introductions to the energy markets (e.g. Stephen Errera's Trading Energy Futures & Options or Peter Fusaro's Energy Risk Management) - buy one of these instead!

When used as a graduate level textbook, this work places extreme demands on the student. The lack of simple examples to explain foundation concepts places the student at a disadvantage from the start. The summary examples at the end of each section seemed to be confined to the author's research work and leave the reader more puzzled than enlightened. The endless stream of acronyms is initially annoying, but then becomes almost comical as the experienced reader (ER) becomes more accustomed to the practice. The text is a good resource for anyone specifically interested in risk management of water resource projects. For the rest of us, we'll have to look elsewhere.

The author spends a great deal of time describing his models and methods (referred to by highly forgettable acronyms) as if they were standards of practice. The writing is not easy to read and the organization of the material and poor indexing do not facilitate use as a reference. A lack of problems and exercises (as well as the use of non-standard terminology) makes the book hard to use as a classroom text.

There are much better book available that cover this material.

I was dismayed by the low quality of the binding and general production values of this book. The cover binding broke in my first half hour of gentle and practiced use -- I have been handling textbooks as a graduate and undergraduate for nearly 20 years, and I know how to handle a book. The low quality is outrageous given its price of over 100 dollars. One has (sadly) come to expect some price gouging in the marketplace of advanced academic textbooks; however the least such pirates should do is to provide decent quality and production values in their overpriced wares.

On the other hand, this text seems to me to be practically indispensable in its coverage of the mathematical underpinnings of a part of Systems Engineering which has grown greatly in prominence in the past decade or so--That is, risk management. The book is pretty chaotic and appears hastily thrown together from recently published papers and other "young" sources. But (I believe) one has to look past some of the shortcoming and acknowledge that it contains some very valuable material, presented by one of the genuine pioneers in the field.

The book contains many modern risk analysis tools not found in other books of its kind. What I like with the book is that it presents very sound and meaningful challenges to many traditional risk methods and provides alternative techniques to correct these shortcomings. The examples are practical and easy to comprehend. I hope that the future editions shall include exercises (or problems) to serve as mechanism to further hone the understanding of the students (or any readers of the book).

Jack Daugherty has put a ton of effort into gathering lots of algorithms and relationships describing human exposure to chemicals. One would have to look in a numerous different places to come up with all the information concentrated in this one book. Anyone who models human exposure potential would benefit from owning it. Indeed, Chapters 8 and 9 are worth the price of the book.

"With the clear explanations presented in this text, even a novice will be able to practice the art of exposure assessment"

Although the idea for the book is well conceived, the manner in which it is carried through is not. Mr. Daugherty has the bad habit of utilizing terms he has not defined, switching gears in the middle of discussions and other irritating habits.

He also has a rather bad habit of pontificating, which is not required in a book of this type.

Not nearly as useful as I would have liked.

The content is kind of chaos and the book seems like a graduate student project

This is probably one of the most unique books on IT project risk management in that it doesn't go into the process and techniques of risk management, but in the common risks and how to deal with them.

Don't expect qualitative or quantitative risk assessment methods, or even a risk management process that is almost an obligatory part of most project management books. Do expect the collective wisdom of real people who were interviewed, and their recommendations for dealing with the 'real risks'.

These risks range from misaligned or unwarranted expectations to slippery requirements. If you've managed an IT project many of the risks will be familiar. How the PMs who were interviewed handled them will be illuminating.

Aside from the fact that this is a highly readable book that is packed with wisdom and advice, the appendices also add a considerable value. Appendix 1 cross references the risks (constructs) by theme making it easy to quickly find the solution to a particular issue. Appendix 2 gives 5 hypothetical project profiles that reinforce the information in the body of the book, and Appendix 3 is a collection of strategies from the body of the book.

Regardless of whether you are preparing to manage your first project or are seasoned and battle-scared, this book provides knowledge and advice that you can use.

This book makes sense to IT project or very samll, simple and non-complex construction projects when more sophiscated and expensive analysis tools could not be afforded. For large Oil & Gas or mega construction projects, this book is somewhat misleading. I bought the book hoping to find a model which will help me analyze project cost estimate / schedule uncertainty, therefore establish the contingency as well as risk response plan, I was quite disappointed paying over $100 for this 140-page booklet.

The ideal audience for this book is relatively narrow, consisting of readers who meet the following two criteria: (1) new to risk management techniques, and (2) using Palisade @Risk. In fact, this book comes close to being a tutorial on using @Risk, which is a popular commercial product that works within Microsoft Excel and project management programs.

If you are new to advanced techniques in project risk management you'll like the way the author succinctly covers all of the key elements of project risk assessment, project finance forecasting, and simulation and modeling. Considering the complexity of the subject area, and the fact that both probability and simulation techniques are covered, the author does a remarkable job of conveying the wide range of topics in a scant 134 pages. I especially liked the generous use of graphs and examples, and the way each topic was broken down into easy-to-grasp facts and steps.

However, even without @Risk you can learn much about risk assessment from this book, including a refresher on probability distributions, how to perform an assessment using manual techniques, and modeling and simulation with an emphasis on Monte Carlo simulation.

The only problem I have with this book is that it's out of date with respect to @Risk, which has evolved into a much more capable tool since this book was first published 7 years ago. Since one of the this book's strengths is the way it teaches how to apply @Risk to real world project risk assessment, the fact that it's out of date with respect to the software version diminishes its value.