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May 19

Eight rules a risk manager must remember

Posted by abiao at 14:33 | Others | Comments(9) | Reads(8319)
Unlike launching rocket, managing risk is a combination of art and science that should incorporate a number of fundamental characteristics. This post is by no means another ex post analysis of the reasons of current credit crisis, instead, it is about eight simple while crucial rules a risk manager or risk analyst must keep in mind (print out and post it on your PC). Sources are from http://www.geocities.com/mrmelchi/rule.htm and http://nasdaq.riskgrades.com/clients/nasdaq/edu_course.cgi?href=Module4-L2.html.

1.There is no return without risk. Rewards go to those who take risks.
2. Be transparent. Risk should be fully understood.
3. Seek experience. Risk is measured and managed by people, not mathematical models.
4. Know what you don't know. Question the assumptions you make.
5. Communicate. Risk should be discussed openly.
6. Diversify. Multiple risks will produce more consistent rewards.
7. Show discipline. A consistent and rigorous approach will beat a constantly changing strategy.
8. Use common sense. It is better to be approximately right, than to be precisely wrong.


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I wrote on my post-it note already, nice.
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Printed and taped right nest to my computer:)
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These tips could sometimes also be applied to every day life. Is cray how common sense is almost not so common sometimes
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Great tips - these remind me of what I learned in finance classes.
thank you
This steps are crucial. As a project manager in a fortune 500 company I whole hardheartedly believe that risk management is one of the most important and oft overlooked aspects of project planning.
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I'm a new business owner and I'm finding that these are a great set of principles to keep in mind througout my decision making.
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Thanks for these tips! Can't wait to share with my team.
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Discipline should always be the very first thing to everything that you want to be or you want to achieve.
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