Last updated: 20 December 2021. Here's my straight-forward ranking of the best financial risk management books.
The risk management activity undertaken in organisations today continues to grow. This applies to a number of industries, such as private equity & venture capital, investment banking, wealth management and industry.
In wealth management; I could point to the increase in correlation between financial markets in different geographical regions, or how different asset classes tend to now move in-step. Each of these phenomena seen in the last two decades have added more pressure to the asset allocation process.
Industry and businesses are alert to tail risks, known as black swan events, which are impossible to specifically predict, but whose presence tends to dominate trading for extended periods of time. The recent pandemic being the perfect example.
Financial risk management is clearly key, and it's more important than ever as businesses grow ever larger and more interconnected. But how do you learn more about this blend of art and science?
The top 5 financial risk management books below should give you the right start in understanding and mastering financial risk.
I've picked each on the basis of
- A combination of my own and other external reviews
- Publishing volume & best seller status
- Qualitative factors, such as relevancy to the current year
All books featured are suitable for you to pick-up without much prior risk management experience, as they don't tend to assume much prior knowledge.
They can actually be read for free with Amazon's Kindle Unlimited free trial.
Click on any title below to see the latest price from Amazon, you'll be shocked at how affordable the most popular titles are. As an Amazon Associate, I earn a small commission from qualifying purchases which helps to support this site. This does not impact how I compile the list. Happy reading!
Download all these risk management books for free with Kindle Unlimited
You DON'T even need a Kindle device to download booksHere's a useful tip that will save you £100+ on finance books. Sign-up to Amazon's Kindle Unlimited free trial, which offers access to all titles for free for 30 days.
- There's no obligation to continue with a paid subscription.
- You don't even need a Kindle to enjoy - any device will do.
If you're cost-savvy, you'll already be calculating the savings you could unlock and the knowledge you could gain by downloading 5 books over the next 30 days.
Financial risk management books for novices
Looking for where to begin in such a large topic?
Best seller
Financial risk management books for banking
Technical guides to ensure financial institutions can generate profits in any circumstances
The best risk management books for generalists
Explore more than just financial risk, including cyber, operational and legal elements
My Top 5 Financial Risk Management Books for 2022
Click covers to see latest reviews and prices1. Fundamentals of Risk Management - Paul Hopkin
Financial Expert Rating:
Synopsis:
"This fifth edition of Fundamentals of Risk Management is a comprehensive introduction to commercial and business risk for students and risk professionals. Providing extensive coverage of the core frameworks of business continuity planning, enterprise risk management and project risk management, this is the definitive guide to dealing with the different types of risk an organization faces.
This latest editions also includes a thorough overview of international risk management standards and frameworks, strategy and policy.
Online supporting resources include lecture slides with figures, tables and key points from the book."
Who this book is for:
A comprehensive guide for those who are serious about immersing themselves in financial risk management theory.
Fundamentals of Risk Management is the definitive text for those beginning or considering a career in risk.
This textbook will help you understand and develop a 'framework' through which you will place risk management into context over the course of your career. It's a great starting point to sign-post to other more practical applications further down the line.
My personal top book pick for financial risk management on financial-expert.co.uk
Financial Expert Rating:
Synopsis:
"Risk Management and Financial Institutions, Fifth Edition explains all aspects of financial risk and financial institution regulation, helping you better understand the financial markets—and their potential dangers.
Inside, you’ll learn the different types of risk, how and where they appear in different types of institutions, and how the regulatory structure of each institution affects risk management practices. Comprehensive ancillary materials include software, practice questions, and all necessary teaching supplements, facilitating more complete understanding and providing an ultimate learning resource."
Who this book is for:
All financial professionals need to understand and quantify the risks associated with their decisions. This book provides a complete guide to risk management with the most up to date information.
- Understand how risk affects different types of financial institutions
- Learn the different types of risk and how they are managed
- Study the most current regulatory issues that deal with risk
With this Wiley textbook, you can get the support you need as a student or professional to study the world of risk management as it applies to financial institutions.
John Hull is a well-regarded writer of textbooks concerning risk. One of his texts also features on our list of the best derivatives books.
Financial Expert Rating:
Synopsis:
"Financial Risk Management presents an in-depth look at banking risk on a global scale, including comprehensive examination of the U.S. Comprehensive Capital Analysis and Review, and the European Banking Authority stress tests. Written by the leaders of global banking risk products and management at SAS, this book provides the most up-to-date information and expert insight into real risk management.
Quantitative capability is increasing with lightning speed, both methodologically and technologically. Risk professionals must keep pace with the changes, and exploit every tool at their disposal. Financial Risk Management is the practitioner's guide to anticipating, mitigating, and preventing risk in the modern banking industry."
Who this book is for:
This book is the product of the authors' experience in developing and implementing risk analytics in banks around the globe, giving you a comprehensive, quantitative-oriented risk management guide specifically for the practitioner.
- Compute and manage market, credit, asset, and liability risk
- Perform macroeconomic stress testing and act on the results
- Get up to date on regulatory practices and model risk management
- Examine the structure and construction of financial risk systems
- Delve into funds transfer pricing, profitability analysis, and more
You'll love Jimmy's approach to heading up chapters with insightful glances backwards to recent (or not-so recent) historical events connected to the topic.
Financial Expert Rating:
Synopsis:
"The definitive guide to quantifying risk vs. return--fully updated to reveal the newest, most effective innovations in financial risk management since the 2008 financial crisis
About the Authors: Michel Crouhy is head of research and development at NATIXIS and the founder and president of the NATIXIS Foundation for Quantitative Research.
Dan Galai is the Abe Gray Professor of Finance and Business Administration at the School of Business Administration, the Hebrew University in Jerusalem.
Robert Mark is the Founding Chief Executive Officer of Black Diamond Risk which provides corporate governance, risk management consulting, risk software tools, and transaction services."
Who this book is for:
Written for risk professionals and non-risk professionals alike, this easy-to-understand guide helps you meet the increasingly insistent demand to make sophisticated assessments of companies' risk exposure. It provides the latest methods for:
- Measuring and transferring credit risk
- Increasing risk-management transparency
- Implementing an organization-wide Enterprise risk Management (ERM) approach
The Essentials of Risk Management is certainly one of the best selling financial risk management books on the markets, and it's easy to see why.
This book is currently rated 4.4/5 on Amazon with over 50 reviews at the time of writing, which is impressive for a technical book for a niche discipline.
Financial Expert Rating:
Synopsis:
"You cannot afford to ignore the explosion in mathematical finance in your quest to remain competitive. This exciting branch of mathematics has very direct practical implications: when a new model is tested and implemented it can have an immediate impact on the financial environment.
To help you investigate the most up-to-date, pioneering developments in modern risk management, the book presents statistical theories and shows you how to put statistical tools into action to investigate areas such as the design of mathematical models for financial volatility or calculating the value at risk for an investment portfolio."
Who this book is for:
With risk management top of the agenda for many organizations, this book is essential reading for getting to grips with the mathematical story behind the subject of financial risk management.
It will take you on a journey—from the early ideas of risk quantification up to today's sophisticated models and approaches to business risk management. This book is your one-stop-shop for effective risk management.
Simon's academic background as a lecturer really shines through in his ability to explain and teach complex concepts in an effective manner.
Download all these risk management books for free with Kindle Unlimited
You DON'T even need a Kindle device to download booksHere's a useful tip that will save you £100+ on risk management books. Sign-up to Amazon's Kindle Unlimited free trial, which offers access to all titles for free for 30 days.
- There's no obligation to continue with a paid subscription.
- You don't even need a Kindle to enjoy - any device will do.
If you're cost-savvy, you'll already be calculating the savings you could unlock and the knowledge you could gain by downloading 5 books over the next 30 days.
The Financial Expert™ Best Risk Management Book Challenge
I challenge you to read one risk management book per month and see if it revolutionises your investing style!
The Financial Expert™ Best Risk Management Book Challenge is a well-loved feature of this website.
You could think of it as a blend of professional and personal development, but ultimately it's about intellectual development.
They say that mastery comes from 10,000 hours of practice. This would equate to about 7 years behind the desk in a risk-management role on a full-time basis.
There's probably a lot of truth to that concept, however that learning journey isn't a linear path. Rather than being a straight line, you can immediate set out to clear the 'beginner' hurdle of risk management by immersing yourself in several texts that will enable you to leave your misconceptions behind.
That's why I created the best risk management book challenge. It's a challenge to encourage you to pick up more than one risk management textbook to turbo charge your education.
The rules of the challenge are simple:
I challenge you to read one financial risk management book per month for the next year, and find your new favourite!
If you consider higher education in the UK, you'll appreciate that an undergraduate degree is not simply a three-year module in a single topic. No, in fact it is usually a collection of 3-4 modules taken each year, culminating in 10-12 modules taken over the course of a degree.
It's this breadth of topics, together with a variety of teachers which creates the sense that you are well studied and versed in a topic - you've become an expert.
That's what this book challenge is all about - seeing risk management from different angles. But more about that in the next section.
First, some tips in how to take on the challenge itself:
Some guidance
- I found it helpful to stock up on books for the next few months, so that when a new month rolls around, my next book was my bed-side table asking to be opened!
- Pick a variety of styles. This will keep the challenge fresh and increase the diversity of opinion.
- Pick at least one book that you don't think you would enjoy, this book might be the one that surprises you the most!
- If you're time-starved, audio books are absolutely fine!
Where to begin?
My list of the 5 best financial risk management books above is a great place to start, however you'll probably want to stick to the industry or discipline that best suits your current or hopeful future role.
Good luck!
Even the best risk management books offer a single perspective
"Alignment of business strategy and risk appetite should minimize the firm's exposure to large and unexpected losses. In addition, the firm's risk management capabilities need to be commensurate with the risks it expects to take."
Financial risk management. It isn't a topic of conversation you often overhear in pubs (unless you happen to enjoy a drink in the City of London after hours). It's a technical discipline, and as a result it has become a web of interconnected ideas and concepts which continuously evolves to respond to dramatic new events, new models and new authors.
The best risk management book for a beginner will assume zero knowledge and help paint a roadmap for the reader. At this early stage in your financial education, you aren't looking to specialise in a particular area, as you haven't even discovered the full range of ideas from which you can make an informed selection.
I therefore recommend that you stick with one of the 5 best risk management books above when choosing your first book to get into risk management.
But I implore you to not stop there. With such a broad industry and so many diverging views, you'd be mad to consider your learning journey over after a single book. Even if it is 500 pages!
What you want is a variety of perspectives, specifically from different authors with different backgrounds.
Perhaps it would be valuable to contrast the risk management approach of a UK-centric banking figure to someone based on the US.
Or maybe it would be useful to compare new versus old, or the similarities and differences between risk management policies as applied to different areas of banking or wealth management.
When taken in isolation, it's easy for a beginner to wrongly make assumptions as to how universal or applicable a particular idea is when applied in the real world.
Only when you see many different applications in numerous scenarios can you begin to understand the limitations of risk management models and theories.
I could use the metaphor of driving a car. We are all taught to drive in a steady and careful manner, and I could speculate that most of us have never turned a corner so fast that the rear end of the vehicle lost grip and began to slide. It's great to know we've driven safely, but because we haven't experienced this situation - we don't actually know:
- At what point would the vehicle lose traction
- How does the car feel under that condition
- Whether we would instinctively take the correct action to set the vehicle back on its course.
Any driving instructor, stunt driver or high-speed professional driver in the emergency services will have taken an advanced driving course which exposed them to exactly these conditions to give them a greater mastery of driving.
Applied to risk management - it pays for us to understand theory, but also hear the case studies and diverging opinions which prove those theories wrong. Because it's only with that context that we can place full confidence in the proposals and conclusions we hope to draw from our work.