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"A pocket guide to risk mathematics: key concepts every auditor should know": The story behind the book

This book exists because overconfident reliance on dodgy risk modelling was one the main causes of the 2007 - 2009 credit crunch. I wanted to do something about it and realised that auditors, particularly internal auditors, have the potential to do much, much more than they have in the past. I also suspected that much more would be expected of them, despite the obvious skills challenge.

In 2008 I was invited to make a speech at a conference on risk and governance in the financial sector. In this speech I asked the audience a number of questions and by shows of hands we quickly established that most people in the audience agreed that faulty risk assessment had been a major cause of the credit crunch and that the most important weaknesses in risk analysis were conceptual. I went on to show the sort of issues that internal auditors with only a conceptual understanding of risk mathematics could detect.

At the end of that talk the audience reaction was mixed. Some were thrilled while others were anxious to grab the microphone and say that never, ever, should anyone see them and their internal audit team as in any way responsible for the reliability of risk models.

The presentation was the talking point of the day and I was asked to repeat it for a select gathering of heads of internal audit of insurance companies in the City of London. If any of the world's auditors would know about risk mathematics it surely would be them, and yet with a few easy test questions we quickly established that nearly all lacked - or had forgotten - basic knowledge.

I began to think very seriously about how to provide that basic knowledge in a way that would fit the pressured lives of people like them. By the summer of 2009, with help from test readers, the book was written! Wiley were keen to publish it. Now I hope that as many people as possible will read it and begin a gentle revolution in audit thinking about risk.



In the UK try Amazon.

In the USA try Amazon.

Anywhere else, check Wiley's page on where to buy.

  © 2010 Matthew Leitch