Bull Bear Report Apr 08 2011

Best Books for Jobs in Compliance and Risk Management

By julie steinberg

Compliance and risk management hiring is taking off in 2011. If you're in the industry or looking to break in, it pays to read up on the sector to ensure you've got a good grasp of the field. We spoke to industry insiders, recruiters and compliance practitioners to gather their top book picks -- both practical and academic.

1. Realism in Lending by P. Henry Mueller and William W. Sihler

This book will be published in July by the Risk Management Association, a Philadelphia-based risk management industry group in the financial services industry. Mueller wrote the first credit policy manual at a major bank in 1974 and has written several articles and books on credit risk. Sihler, a faculty member of the Colgate Daren School of Business Administration at the University of Virginia, has coauthored several books on financial management. They call on banks to implement credit policies that will minimize risk.

Key takeaway: A blueprint for moving forward after the financial crisis, which has spurred financial institutions to reconsider how they deal with risk.

2. Risk Management: Foundations for a Changing Financial World edited by Walter V. "Bud" Haslett Jr.

This is the most recent guidebook on the evolution of risk management, published in 2010 by Wiley and edited by Haslett, the head of risk management, derivatives and alternative investments for the CFA Institute. The book, which is composed of articles from eminent risk management academics and practitioners, provides an overview of the last 20 years of risk management and also offers chapters on managing risk and derivatives in an increasingly regulatory atmosphere.

Key takeaway: The events of the past should dictate how you conduct yourself in the future.

3. Essential Strategies for Financial Services Compliance by Annie Mills

Even though this 2008 book from Wiley is somewhat U.K.-centric, it was written to explain compliance to non-technical experts. It's meant as an introduction to those considering entering the field, and Mills, a senior compliance officer at Standard Bank in London, details important compliance department activities and what a daily routine performing those activities might look like.

Key takeaway: The nitty-gritty of the day-to-day.

4. The Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices by Anthony Tarantino

Tarantino, an expert in compliance, is an adjunct professor of finance at Santa Clara University Leavey Graduate School of Business, a former compliance practice lead at KPMG, and a current consultant to many financial services firms. In this 2008 tome published by Wiley, he explores the implications of international regulations and laws for the finance industry. He also closely scrutinizes professional compliance standards.

Key takeaway: In an increasingly-connected world, compliance has gone global.

5. Elements of Financial Risk Management by Peter Christoffersen

If you're going to become a risk manager, you should understand the theories behind the work that you do. Peter Christoffersen, an associate finance professor at McGill University, details the various statistical models behind measuring and reporting risk in this 2003 book published by Academic Press. It's on the academic side and a bit intense, so keep that in mind before picking it up.

Key takeaway: The underlying statistical models are a must-know for this career.

6. When Genius Failed: the Rise and Fall of Long-Term Capital Management by Roger Lowenstein

This 2001 narrative published by Random House describes the events that led to the spectacular demise of Long-Term Capital Management, a hedge fund that lost billions in 1998 after the Russian financial crisis. Lowenstein, a financial journalist who has written for the New York Times and The Wall Street Journal, outlines the firm's failure to manage its risk and its subsequent fate.

Key takeaway: No matter how many Ph.D.'s the founders have, if they don't care enough about risk management, everything can blow up.

7. Finance Ethics: Critical Issues in Theory and Practice, edited by John R. Boatright

Boatright, a professor of business ethics in the Graduate School of Business at Loyola University Chicago and executive director of the Society for Business Ethics, authored this 1999 book published by Blackwell that explores the intersection of ethics and finance theory. Updated in 2007, the book is a compilation of articles that focus on reputational risk, financial due diligence, and breaches of contract, for example. The book avoids jargon and Wall Street lingo, making it accessible to non-industry readers.

Key takeaway: In a world populated by Madoffs and Rajaratnams, risk and compliance officers have to make sure good corporate governance is the order of the day.

Write to Julie Steinberg

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