Proactive risk management [Book Review]

494 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 50, NO. 4, NOVEMBER 2003 Book Review_____________________________________________________________________________ Proactive Risk Management P. G. Smith and G. M. Merritt (Shelton, CT: Productivity Press, 2002) Reviewed by A. Anandarajan a risk management program. I have not seen this issue discussed elsewhere. In conclusion, the authors present a model that is easy to understand. They provide a set of simple steps without unnecessary verbosity. They adopt a “holistic” view identifying organizational and cultural issues that have to be understood to implement a project successfully. The authors bring their vast experience to this book with numerous examples of “how to” and discussion of a wider variety of techniques than can be found in other books in this field. To illustrate my point, I particularly liked the design structure matrix (DSM) as a tool for managing “incomplete” information used in Chapter 9. From a practical stand point, managers do work with insufficient information on many occasions and this itself is another form of risk. Most text books deal with this problem discussing probability theory and “expected values” (also discussed in this book). While academically acceptable, they do not have the practical merit relative to the DSM method suggested here. Many examples like the DSM model which, is not found elsewhere, make this book enjoyable to read. Overall, the authors provide straightforward and practical suggestions to managers for managing risks and implementing strategies in a real world situation. Risk management is an essential element of modern business administration. All business firms face potential for loss from lawsuits and accidents. Risk management is the art and science of anticipating potential losses and developing a plan to survive them. In modern text books, this topic has been examined from different perspectives: from a legal perspective, discussing the legal ramifications of different types of risks; from a statistical view point, generating mathematical models to identify probabilities of risk; from a philosophical viewpoint, providing elegant theories; and from a practitioners’ view point. The last mentioned is a relative rarity. Most modern textbooks approach this topic from legal perspective, statistical perspective, or a combination of both. The problem with the majority of these textbooks is that they tend to get esoteric, especially those that approach this topic from a mathematical perspective. Proactive Risk Managment, by Smith and Merritt, is a refreshing rarity in that the authors keep intricate discussion of statistical models to a bare minimum. Thus, one does not need to have an in-depth comprehension of, for example, Bayesian theory, to understand the concepts discussed in this book. The authors look particularly at one aspect of risk management, namely, risks associated with product development. The purpose of the book is to identify potential problems that can happen during the product development process. The authors lead us through a risk management process using the premise that anticipation of problems reduces the element of surprise and can help reduce losses. The risk management process discussed in this book is not new or novel—the approach has been discussed in many textbooks. Virtually every textbook on risk management discusses the basic model used in this book. Further, modern textbooks, especially those used in academia, compete to incorporate the most recent research or discuss the latest technology and the impact of technology on risk management. These issues are significantly lacking in this book. The only criticism that can be made against this book is that there is no discussion of the latest research in the area of product development management or how the latest technological innovations create new risks or mitigate the threat of other forms of risk. This book approaches the topic of risk management for product development with a refreshing “hands on” approach. The authors discuss many issues from their own personal experience. The entire book is written in a “user-friendly” style that makes for very easy reading. They develop a general model of risk, that, in my opinion, can be adopted/adapted for any type of product development project. Further, a lot of academic text books spend inordinate amounts of pages discussing symptoms of risk. The authors spend the time more usefully discussing the root causes (which they refer to as “drivers”) of risk. Another facet is that they adopt a “cross functional” approach discussing how people with different skills can work together. The authors discuss a multiplicity of tools and strategies that can be used to implement an effective project risk management program. A feature of this book that makes it stand out relative to other books in this field is the focus on organizational and cultural impediments that can act as an impediment to This important little book (it is only 119 pages) should be read by anyone interested in brainstorming for themselves some of the longer-term economic impacts and policy implications of the Internet. Even if one disagrees with some of the views and conclusions presented, one is forced to think through the statements and one’s reasons for questioning them. Further, the book is a timely reminder that just because a lot of Internet stocks turned out to be full of hot air, the utility and productivity improvements representing the original reasons for the hype have often proved real and are continuing. Internet sales are growing and business-to-consumer (B2C) sales for Christmas 2002 were substantially larger than the year before despite a poor economy and stock market. Therefore, just as the impact of the railroad and the telegraph in the nineteenth century in another “watershed” event opened the country and led to dramatic economic growth and expansion of markets independent of various speculative booms in their stocks, so too the Internet is and will have a continuing impact on the economy, business, and markets in the years ahead. Based on the inputs and opinions gathered from various experts, Beyond the Dot.coms, The Economic Promise of the Internet tries to evaluate and highlight some of these considerations. In pursuing its goals, the “book draws on the work of the Brookings Task Force on the Internet, which pulled together eight teams of experts from leading business schools and universities to study the possible impact of the Internet on major sectors of the U.S. economy over the next five years.” One over-riding conclusion is that its impact will be greater on so-called “old” economy sectors and businesses than on the “New Economy,” even allowing for the fact that so many new economy companies have disappeared. From this perspective, old-line retailers such The reviewer is with the School of Management, New Jersey Institute of Technology, Newark, NJ 07102 USA (e-mail: [email protected]). Digital Object Identifier 10.1109/TEM.2003.820993 The reviewer is with the School of Management, New Jersey Institute of Technology, Newark, NJ 07102 USA (e-mail: [email protected]). Digital Object Identifier 10.1109/TEM.2003.820992 Beyond the Dot.coms, The Economic Promise of the Internet R. E. Litan and A. M. Rivlin (Washington, DC: Brooking Institution Press, 2001) Reviewed by W. V. Rapp 0018-9391/03$17.00 © 2003 IEEE