Behavioural risk management studies the psychology of financial decision-making. Interest in behavioural risk has been growing specifically because investors rarely behave according to the assumptions made in traditional financial theory. Risk behaviour is a huge issue in finance and examples of this risk type can be found in the news on a near-daily basis.
From Mark Carney’s proposal to put a proportion of bankers' salaries at risk in case of misconduct, to the FX rigging scandal and payment protection insurance corruption revealed at Lloyds, focus on and interest in risk behaviour is growing exponentially. Investment professionals can no longer afford to ignore or fail to grasp the psychological motivations which can drive high-risk decision-making. People in the industry are realising that there is a benefit to understanding people, their emotions and their behaviour because it impacts every aspect of business.
Author Cathy Hampson, Director at AIG and a qualified counsellor with an Advanced Diploma in Humanistic Counselling, brings together the psychology of investing and managing in one space. An Introduction to Behavioural Risk examines how to use this knowledge as a competitive advantage for investors and risk managers. It considers how risk culture is created in an organization, and how it can be assessed and changed as necessary. The book teaches readers how to better measure, monitor and harness ‘the human factor’ in driving performance and instituting good behaviour within company culture.
Due to the specificity of individual experience, behavioural risk can present unique situations, however there are many strong correlations between situations that can be harnessed nevertheless, allowing for the categorization of recurring issues and particular types of problems. An Introduction to Behavioural Risk will inform thinking and decision-making to enable the reader to better-challenge the current state of play at their organisations. Using the action plan and case study sections, readers will be able to create their own tailored approach to mitigating this risk.
The first part of the book will be about the theory with practical examples; at the end of that section will be specific case studies – one for investors and one for risk managers. The second part of the book will follow a ‘dip in, dip out’ format, in which problems are posed and ideas to solve them suggested – almost like an ‘agony aunt’ section for relevant investing and managerial problems.
An Introduction to Behavioural Risk explores the practical applications of behavioural finance for investment managers, traders and risk professionals, teaching the reader how to utilise key behavioural concepts to bolster personal performance and that of their company. Job titles of those interested in the book will include: CROs, CFOs, heads of analytic functions, board members, and bank and insurance regulators.
|Publication date||30 Dec 2015|
|Size||155mm x 235mm|
Section 1: Behavioural Risk: The Competitive Advantage
Chapter 1: What is the issue with risk and human behavior – what are we trying to solve?
Chapter 2: How do individuals react to risk and why?
Chapter 3: What is your own attitude to risk – how well do you understand it?
Chapter 4: How does individual behaviour translate into a risk culture?
Chapter 5: How can you judge an organization’s culture?
Chapter 6: Understanding both individual behaviour and company culture, how can you use this information to your advantage?
Chapter 7: How can you spot that culture is changing and the ‘early warning signs’ of a future impact?
Chapter 8: How can you embed this knowledge in an effective framework?
Chapter 9: Reaping the rewards of the competitive advantage
Chapter 10: Conclusions
Competitive Advantage Case Studies
Section 2: Workbook – ‘Risky Situations’