Rothstein Associates Inc.

THE BOOK OF RISK
Dan Borge

PRAISE FOR THE BOOK OF RISK

"Failure to read and to heed Borge on risk is an unacceptable risk." Charles S. Sanford,
Retired Chairman of the Board and CEO, Bankers Trust New York Corporation and Bankers
Trust Company

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"The essential concepts of risk set forth in clear language and an engaging manner. Dan
Borge demonstrates the use of tools for decision making in uncertainty with intuitive
examples and broad application." Clinton Lively, Managing Director, Corporate Risk
Management, Merrill Lynch

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"Would you like a systematic way to make decisions whose risky outcomes can damage
your well-being? Have you been out of school long enough so that you want the answers and
not the theories? The Book of Risk brings the scientific tools of risk management to
intelligent investors using Strunk and White's crisp and clear writing style." Professor Alan
C.
Hess, School of Business, University of Washington

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"Dan Borge's The Book of Risk provides clear insights and tools to help readers make
decisions that shift the odds in their favor. The biggest risk is not reading it." Peter D.
Moore, Founder and CEO, Human Capital Forum

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"Combining technical integrity with common sense, Dan Borge has taken the arcane topic of

risk management and transformed it into a lively, mainstream way of thinking about how we
make choices every day in financial markets, in life sciences, in simply choosing to cross a
busy road when we're in a hurry. Quite simply the best introduction to risk management yet
written" John Herron Jr., Former Senior Managing Director and Head of BT Ventures,
Bankers Trust Company Consultant, and Managing Partner of Elm Tree, LLC

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"Dan Borge builds the concepts of risk management in a very readable and interesting
manner. Readers who watch the house being built will be better equipped to manage risks in
both their professional and personal life." Dwight B. Crane, George F. Baker Jr. Professor
of Business Administration, Harvard Business School
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"A down-to-earth look at an exciting field for everyone who'd like to shift the odds in the game
of life in their favor, The Book of Risk is especially valuable reading for sophisticated
investors, entrepreneurs, finance professionals, and managers throughout all industry
sectors. It also contains practical applications for professional risk managers interested in
gaining a more thorough understanding of the concepts behind the tools they use every day.

"Written by one of the most highly regarded experts in the field, The Book of Risk is an
exceptionally clear, thoroughly entertaining introduction to contemporary risk management.
Dan Borge illuminates the delicate process of making decisions in an uncertain world from a
professional risk manager's point of view. Writing with verve and good humor, he breaks the
concepts and applications of risk management down into plain English. He describes the
techniques professional risk managers use for determining probabilities and ferreting out
personal preferences, and then combines them in a way that helps you to take more effective
action, increase your chances of positive outcomes, and recognize and seize further
financial
opportunities. And, most importantly, Dan Borge shows you where in your life-personal or
professional-you already act as a "risk manager" and how to adapt risk management
methods for achieving your goals and shaping your destiny.

"Face it, life is all about change, and the future is always uncertain. Each one of us, in our
own
way, expends a considerable portion of his or her mental energies each day sizing up odds,
weighing risks and benefits, and attempting to avoid negative outcomes. As Dan Borge
explains in his lucid, down-to-earth style, you should read this important book "not to become
a risk manager, but to become a better risk manager, since we are all risk managers
already."

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FROM THE PREFACE

"This is not a risk management textbook. A textbook would require more rigor and detail than
either you or I could stomach. There are already many excellent sources available on risk
management that meet that need. Nor is this a
How-to-Risk-Manage-to-Success-in-Ten-Easy-Steps book. I don't believe that either risk
management or success is reducible to simplistic rules or recipes that anyone can follow. I
do
believe, however, that there are general principles of risk management and that if you are
aware of them, you have a head start in making better decisions.

"What I have tried to do here is put down on paper some thoughts and examples that will
pique your interest in risk management, even if you think that you know nothing about it and
could care less. If you trust me for a few pages, you may find it to be a subject worth thinking
about and arguing about, not only for its intellectual interest, but for its practical f value in
your
professional or personal life.

"I will put you in the driver's seat. You will be the decision maker as we explore different ways
to confront and manage risks. Risk management is for decision makers and if you view it
from that perspective, you will have a much better chance of appreciating its power. I will be
your guide, advisor, and coach.

"Let's get started."
DAN BORGE
Clinton Corners, New York
March 2001

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CONTENTS

1 What Is Risk Management and Why Should You Care?
2 Beliefs and Preferences
3 Combining Art and Science: Volatility and Correlation
4 Fundamental Strategies for Managing Risks
5 The Enemy Within
6 Grooming You to Be CEO
7 The View from the CEO's Chair
8 You Are in Charge of Your Life - What Are You Going to Do?
9 Risks and Opportunities

Index

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ABOUT THE AUTHOR

"DAN BORGE was managing director and partner at Bankers Trust Company. During his
twenty years with Bankers Trust, he was the architect of RAROC, the first-ever risk
management system implemented institutionally. Prior to working at Bankers Trust, he
designed airplanes at Boeing. Mr. Borge has a degree in aeronautical engineering and a
doctorate in finance from Harvard Business School."

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2001, 244 pages. Order #DR552.
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