This original book takes psychological research, experimental economics, and recent business scenarios to provide both students and practitioners with the insights to develop a strong risk management strategy. Shefrin draws on his previous research into characterizing organizational culture through the perspective of a process-pitfall lens. Part I provides the psychological foundations for judgments and decisions by individuals, through examples, introspection, comparison, and reflection. Part II extends the framework to describe how these concepts apply in an organizational setting. Part III applies both the individual and organizational-based concepts to understand the manner in which human psychology generated the global financial crisis, along with lessons learned and prescriptions for mitigating financial crises in the future. Part IV discusses recent cases of problematic risk management in the financial sector, with special attention to associated regulatory failures, and the lessons to be drawn from these failures. Part V describes both success stories and failures for operating companies and how we can learn from the experiences of these firms.
