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| Preface | |
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| Acknowledgments | |
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| An Introduction to the Crisis | |
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| Healthy Skepticism for Risk Management | |
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| Common Mode Failure | |
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| What Counts as Risk Management | |
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| Anecdote: The Risk of Outsourcing Drug Manufacturing | |
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| What Failure Means | |
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| Scope and Objectives of This Book | |
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| Risk Management: A Very Short Introduction to Where We've Been and Where (We Think) We Are | |
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| The Entire History of Risk Management (in 800 Words or Less) | |
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| Methods of Assessing Risks | |
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| Risk Mitigation | |
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| The State of Risk Management According to Surveys | |
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| How Do We Know What Works? | |
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| An Assessment of Self-Assessments | |
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| Potential Objective Evaluations of Risk Management | |
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| What We May Find | |
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| Why It's Broken | |
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| The "Four Horsemen" of Risk Management: Some (Mostly) Sincere Attempts to Prevent an Apocalypse | |
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| Actuaries | |
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| War Quants: How World War II Changed Risk Analysis Forever | |
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| Economists | |
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| Management Consulting: How a Power Tie and a Good Pitch Changed Risk Management | |
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| Comparing the Horsemen | |
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| Major Risk Management Problems to Be Addressed | |
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| An Ivory Tower of Babel: Fixing the Confusion about Risk | |
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| The Frank Knight Definition | |
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| Risk as Volatility | |
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| A Construction Engineering Definition | |
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| Risk as Expected Loss | |
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| Risk as a Good Thing | |
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| Risk Analysis and Risk Management versus Decision Analysis | |
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| Enriching the Lexicon | |
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| The Limits of Expert Knowledge: Why We Don't Know What We Think We Know about Uncertainty | |
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| The Right Stuff: How a Group of Psychologists Saved Risk Analysis | |
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| Mental Math: Why We Shouldn't Trust the Numbers in Our Heads | |
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| "Catastrophic" Overconfidence | |
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| The Mind of "Aces": Possible Causes and Consequences of Overconfidence | |
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| Inconsistencies and Artifacts: What Shouldn't Matter Does | |
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| Answers to Calibration Tests | |
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| Worse Than Useless: The Most Popular Risk Assessment Method and Why It Doesn't Work | |
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| A Basic Course in Scoring Methods (Actually, It's the Advanced Course, Too-There's Not Much to Know) | |
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| Does That Come in "Medium"?: Why Ambiguity Does Not Offset Uncertainty | |
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| Unintended Effects of Scales: What You Don't Know Can Hurt You | |
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| Clarification of Scores and Preferences: Different but Similar-Sounding Methods and Similar but Different-Sounding Methods | |
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| Black Swans, Red Herrings, and Invisible Dragons: Overcoming Conceptual Obstacles to Improved Risk Management | |
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| Risk and Righteous Indignation: The Belief that Quantitative Risk Analysis Is Impossible | |
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| A Note about Black Swans | |
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| Frequentist versus Subjectivist | |
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| We're Special: The Belief that Risk Analysis Might Work, But Not Here | |
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| Where Even the Quants Go Wrong: Common and Fundamental Errors in Quantitative Models | |
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| Introduction to Monte Carlo Concepts | |
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| Survey of Monte Carlo Users | |
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| The Risk Paradox | |
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| The Measurement Inversion | |
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| Where's the Science? The Lack of Empiricism in Risk Models | |
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| Financial Models and the Shape of Disaster: Why Normal Isn't so Normal | |
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| Following Your Inner Cow: The Problem with Correlations | |
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| "That's Too Uncertain": How Modelers Justify Excluding the Biggest Risks | |
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| Is Monte Carlo Too Complicated? | |
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| How to Fix It | |
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| The Language of Uncertain Systems: The First Step Toward Improved Risk Management | |
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| Getting Your Probabilities Calibrated | |
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| The Model of Uncertainty: Decomposing Risk with Monte Carlos | |
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| Decomposing Probabilities: Thinking about Chance the Way You Think about a Budget | |
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| A Few Modeling Principles | |
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| Modeling the Mechanism | |
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| The Outward-Looking Modeler: Adding Empirical Science to Risk | |
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| Why Your Model Won't Behave | |
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| Empirical Inputs | |
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| Introduction to Bayes: One Way to Get around that "Limited Data for Disasters" Problem | |
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| Self-Examinations for Modelers Who Care about Quality | |
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| The Risk Community: Intra-and Extraorganizational Issues of Risk Management | |
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| Getting Organized | |
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| Managing the Global Probability Model | |
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| Incentives for a Calibrated Culture | |
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| Extraorganizational Issues: Solutions beyond Your Office Building | |
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| Miscellaneous Topics | |
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| Final Thoughts on Quantitative Models and Better Decisions | |
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| Appendix Calibration Tests and Answers | |
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| Index | |