Erik Banks & Richard Dunn 
Practical Risk Management 
An Executive Guide to Avoiding Surprises and Losses

A proven way to manage risk in today’s business world

Understanding how the risk process works is a critical concept that
business professionals must come to learn. For those who must
understand the fundamentals of risk management quickly, without
getting caught up in jargon, theory, mathematics, and formulas,
Practical Risk Management is the perfect read. Written in a clear,
fast-paced and easily digestible style, this book explains the
practical challenges associated with risk management and how-by
focusing on accountability, governance, risk appetite, liquidity,
client risks, automated and manual processes, tools and
diagnostics-they can be overcome. After finishing this book,
readers will have a solid understanding of the risk process, know
which issues/questions are of critical importance, and be able to
determine how their specific risk problems can be minimized or
avoided.

Erik Banks (Redding, CT) is currently Chief Risk Officer for
Element Re. Prior to that he spent several years at Merrill Lynch
in market/credit risk management roles in London, Tokyo, Hong Kong,
and the United States. He is also adjunct Professor of Finance at
the University of Connecticut, where he teaches MBA students.
Richard Dunn (London, UK) works for Merrill Lynch. He
single-handedly restructured Merrill Lynch’s risk function post in
1998 into its current form.

Table of Content

Acknowledgments.

Biographies.

Introduction: Financial Risks and Avalanches.

PART I: DEFINING AND MEASURING RISKS.

1. Losses: One-Hundred-Year Floods that Happen Every Three
Years.

2. The Basics: A Common Understanding of the Risks.

3. Liquidity: The Heart of the Matter.

4. Suitability: Coping with Customers.

5. Process Risks: The Next Frontier.

6. Measurement: Quantifying the Risks.

PART II: DEVELOPING A HOLISTIC APPROACH TO RISK MANAGEMENT.

7. The Risk Management Process: Building the Foundation.

8. The Financial Risk Mandate: Developing a Philosophy and Loss
Tolerance.

9. Risk Principles: Creating a Code of Conduct.

10. Financial Governance: Assigning Accountability for Risk.

11. The Risk Framework: Limiting and Controlling Risks.

12. Automated Management: Automating Discipline on the Front
Lines.

13. Manual Management: Enhancing the Automated Discipline.

14. Nuts and Bolts: Supporting the Process with Essential
Tools.

15. Ongoing Diagnostics and Transparency: Knowing if the Risk
Process is Working.

Conclusion: Can there be Heroes?

Glossary.

References.

Index.

About the author

ERIK BANKS has held senior risk management positions at
several global financial institutions, including XL Capital, where
he was Partner and Chief Risk Officer of the Bermuda reinsurer’s
derivative subsidiary, and Merrill Lynch, where he spent 13 years
managing credit and market risk teams in Tokyo, Hong Kong, London
and New York. Mr. Banks, an Adjunct Professor of Finance at the
University of Connecticut, has written a dozen books on risk
management, emerging markets, derivatives, merchant banking, and
electronic finance.

RICHARD DUNN became the youngest member of Merill Lynch’s
Executive Committee in 1998. Concurrent with this appointment, he
was made Head of Market and Credit Risk and was instrumental in the
Wall Street ‘bail out’ of hedge fund LTCM. Prior to this, Mr. Dunn
was Co-Head of Merrill’s Equity Division, Head of European Debt,
and Head of Asian Debt and Equity. His training was in debt and
equity derivatives. Mr. Dunn holds a Masters in Economics from the
London School of Economics, speaks Japanese, French and Italian,
and is an avid snowboarder.