E-M8 Entrepreneurial Management for Eternal Mission

Over the last few days, I have had a chance to read through Doug’s latest book: The Failure of Risk Management. Once you get past the bitter/angry tone (justifiably so) of that the chapters detailing the bad practices currently employ, the rest of the book is worth its weight in the most precious metal. If you want to get the most out of this book without spending too much time, read chapter 3 as introduction than skip to chapter 9, then page through chapter 6 and study chapters 10 through 12. Otherwise, while the rest of the book is not nearly as fun to read as Doug’s first book, it is still worth reading.

The basic summary is to do risk analysis:

1) Use only calibrated people for any subjective measurements

2) Decompose the risk in to the key variables

3) Run a Monte Carlo simulation

4) Identify if further research  can reduce uncertainty in any variables that would impact the risk levels

5) Repeat until research can no longer cost effectively reduce risk

The chapters 9-12 are tremendously valuable. My only objection is that most day to day business decisions do not involve millions of dollars, so there is still no good solution for a mom n’ pop corner store, but for anyone invoved with assessing risk in a large enough organisation that can devote the resources to the risk analysis, this is a must read book.

Perhaps most importantly, Hubbard provides great tools that are directly accessible from his website at http://www.howtofixriskmgt.com. The tools make implementation of the concepts in the book something doable. Read it and more importantly apply it.

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