Preface

René Doff

Years of risk management experience have shown me one thing: there is no Holy Grail to stop risks from materialising. The turn of the 21st century was promising as stochastic techniques conquered the world, and especially the world of regulation. Basel II and III, as well as Solvency II, fully embraced value-at-risk (VaR) as an answer to all our problems. Regulatory capital would absorb all difficulties. At the same time, risk models have never truly predicted crises since the data is either missing from the datasets or rejected as irrelevant. Such insights made me sceptical of risk modelling, and the value of risk management in general.

However, I still sincerely believe risk management can add value. It can achieve this by adding new perspectives during the decision-making process, by providing a deeper understanding of underlying patterns and relations, and by preparing for multiple futures. The influence of behavioural economics in the risk management domain is still limited, but that is unjust, an insight that pushed me to write this book in the first place. The resulting journey into the field of behavioural science led me to re-evaluate risk management practices as I

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