The new textbook on risk

3 mins read

I owe all of you an apology.

You must be wondering where in the world have we disappeared to. It’s one thing for me to wander off to Nairobi and not come back, it is a different story when the entire team pulls a disappearing act worthy of X files.

Here is the story behind our absence in June and July.

Earlier this year I signed a two book deal with Palgrave Macmillan, an imprint of Macmillan publishing. My first shipping deadline to the editors at Palgrave Macmillan was 30th June. On 10th July, the first manuscript was shipped to Palgrave. 530 pages, 133,000 words, 10,000 paragraphs.

And if this wasn’t enough we decided that June was a good month to upgrade the courses on our Continuing Professional Education portal and add four more courses. We are expecting a NASBA approval for our courses anytime this month and preparations are on for a big launch when that happens. It’s been a busy month.

Back to the books. The first book, the one we shipped, is a completely updated and revised edition of Risk Frameworks. While Risk Frameworks was originally conceived in 2008 and an updated 2nd edition published in 2010, the last three years saw a lot of new material and challenges. The source of the new material was deeper questions asked by my regular and executive MBA students in Dubai and Singapore and risk engagements we completed for our clients in the region. As I have taught risk and derivative pricing I have always believed that there is a need for a textbook that exists at the intersection of these two topics. A book that I would buy and force on my own students as I had done with Risk Frameworks.

As I had mentioned in our earlier call, the aim to illustrate as many concepts with cases, examples and real life model building exercises in Excel. My biggest challenge while growing up as a risk manager was getting comfortable with context and relevant practices. I found that textbooks I was forced to read would generally be long on equations and short on insights. The few exceptions being Thakur’s Contemporary Financial Intermediation, Smith’s Credit Risk Management and Tuckman’s Fixed Income Securities. I hope this book will address that gap and add to that list.

The 3rd edition of Risk Frameworks is actually four separate books masquerading as one.

Part I – Is an introduction to risk management. Rather than focus on pure financial risk management, we wanted readers to be aware of the context around risk. Beginning with a framework that can be used to think about risk, irrespective of the industry we cover measuring, managing & reporting risk with a chapter long sidebar on bank regulation and why it fails. Cases include a detailed treatment of Jet Fuel Hedging for an airline, Value at Risk and Margin risk management at an investment Bank, the fall of the mighty in 2008 and setting up the credit risk function at a bank.

Part II – Introduces Monte Carlo Simulation and four hands on applications on how this tool can be used to price options, estimate risk exposure, determine the interest rate cut decision for an emerging market country as well as simulate interest rates.

Part III – Consists of commentary and cases that look at factors driving gold, oil, fuel, silver and bond prices as well as more commentary on risk metrics and price behavior

Part IV – Reviews derivative products and their pricing approach from the simplest of options to exotic products.

Together the four books cover the topic of risk management with themes that touch simulation, pricing models, commodity markets, price volatility, interest and inflation rates. They have been written keeping my Executive MBA students in mind and are based on my teaching notes over the last 12 years. In fact, early reviews by students have described the presentation as if they were sitting in one of my classes.

Some of the material has been featured in posts and models here on In fact, it was a post on Delta Hedging and Greeks that put me in touch with my book editor at Macmillan when he noticed what I had shared on Linkedin.

We are now waiting for the initial feedback on the submitted manuscript. We expect that the new edition of Risk Frameworks will come to a book store near you by the end of November, early December 2013. It will hopefully mark the end of a journey that began with me failing the Society of Actuaries V-380 exam for the very last time in 1999.

Ps if you are interested in reviewing the sample first chapter and sharing your feedback, please drop me a note at jawwad at the rate Would love to share it with you and incorporate your feedback.

Also, keep an eye for the book naming event. While we have a few names, we think you are the possibly the best judge of the one that will work best.

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