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Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide Hardcover – April 5, 2011


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Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide + The AIG Story + Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG
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Product Details

  • Hardcover: 349 pages
  • Publisher: Wiley; 1 edition (April 5, 2011)
  • Language: English
  • ISBN-10: 0470889802
  • ISBN-13: 978-0470889800
  • Product Dimensions: 9.1 x 6.3 x 1.2 inches
  • Shipping Weight: 1.2 pounds (View shipping rates and policies)
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (25 customer reviews)
  • Amazon Best Sellers Rank: #64,870 in Books (See Top 100 in Books)

Editorial Reviews

Review

Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide by Roddy Boyd has been longlisted for The FT & Goldman Sachs Business Book Of The Year Award 2011

Members of the seven strong judging panel will decide on a shortlist of up to six finalists in the middle of September.

‘If there is a theme that links most of the 14 titles on the longlist..it is their authors’ quest to work out how and why companies, governments and their leaders fail – and how not to go wrong in the future’

"A vivid portrait of the giant insurer at the center of the 2008 financial crisis."
(The Wall Street Journal)

"The best book of the crisis is Fatal Risk. This is a fabulous book - but it deals with complex subjects without shying away from their complexity and it assumes you have enough knowledge and intelligence to cope. . . This is the best book yet written about any specific episode of the crisis. Buy multiple copies. Give them to your friends. They will be grateful too."
(Bronte Capital)

"A sober work that appears to have been researched extremely thoroughly. . . more convincing on the mechanics of AIG's Suicide than it is on any of the deeper motivations."
(The Financial Times)

"Through superb reporting, Boyd has written one of the financial crisis genre's most important works."
(Bloomberg BusinessWeek)

"As Roddy Boyd demonstrates in his well-written study of AIG's fall, it was the very solidity of the company's credit rating that led it astray. Painstakingly built over the course of 40 years by an army veteran, Hank Greenberg, AIG was the ideal counterparty for Wall Street. . . For some, the demise of AIG was not the suicide described in the book's title, but an act of murder by Goldman. Mr Boyd argues that the investment bank was acting only as any prudent counterparty would. But the author's analysis is unlikely to dent the conviction of conspiracy theorists that AIG was rescued by Hank Paulson, the former Goldman chief executive turned treasury secretary, to prop up Goldman." (The Economist)

"Engaging and balanced account . . . Many books on the financial meltdown that began in 2007 treat AIG as a plot point in a wider drama. Yet valuable lessons can be gleaned from the narrower account that Boyd lays out here -- lessons about the responsibilities of leaders and regulators as well as the hazards of financial engineering. . . The story of AIG's demise has many moving pieces, large and small, which Boyd meshes into a smooth narrative. . . Boyd is good with dialogue and knows how to keep the story going. His reporting is thorough and fair, even when it comes to Timothy F. Geithner's risible assertions that it wasn't the Federal Reserve's job to pop bubbles."
(Bloomberg)

The best book on the financial crisis, and . . . favorite piece of non-fiction work since Michael Lewis' The Big Short. . . The reporting here is incredible."
(Distressed Debt Investing)

"A 10 best finance book.
Does the ongoing financial turmoil leave you scratching your head? Worry not, here's our pick of the finest - and most readable - books about Big Money..."
(The Independent)

'Fatal Risk is must reading for market insiders, investors, business leaders, and anyone who's wondered what really happened in 2008.’ (Hereisthecity.com, April 2011).

'researched extremely thoroughly’ (Financial Times, April 2011).

‘…a vivid portrait of the giant ­insurer at the center of the 2008 financial crisis.’ (Wall Street Journal Europe, April 2011).

‘A cautionary tale of corporate hubris.’ (Ethical Corporation Magazine, May 2011).

‘…Boyd is good with dialogue and knows how to keep the story going’.  (Bloomberg.com, June 2011).

From the Inside Flap

"As author of Fatal Risk . . . I would have found my job much easier if Goldman truly were the real culprit in this saga."
[from "AIG and Goldman Sachs: The Deceptive Blame Game," appearing on TheFinancialInvestigator.com, July 2010]

There certainly has been no dearth of reporting on the causes of the 2008 financial meltdown. Thousands of gallons of ink have been spilled decrying the gross incompetence, if not downright criminality, of mortgage lenders, the wildly excessive risk-taking of Wall Street banks, the cravenness and collusion of the ratings agencies, and the willful ignorance of regulators. Yet absent from the orgy of righteous finger-pointing has been any substantive coverage of AIG, the looming giant in the eye of the tempest—the one company about which it can truly be said that, if it had been allowed to collapse, it would have dragged the entire world financial system down with it.

Fatal Risk is the riveting inside account of how Maurice "Hank" Greenberg, the storied combat veteran and driven entrepreneur, took a motley collection of insurance companies and built them into the world's most innovative and daring financial conglomerate. Made rich and powerful through Greenberg's iron will and vision, AIG was unprepared for his dramatic ouster in 2005. As the company recovered from a bruising regulatory battle, its management did not understand what risks were being taken onto its once mighty balance sheet in the name of a quick buck. As the CDO and real estate markets imploded, AIG's role as the indispensable giant at the corner of Main Street and Wall Street nearly brought down the world financial system.

Perhaps most controversially, investigative reporter Roddy Boyd argues that, contrary to conventional wisdom, Goldman Sachs, and the billions in collateral calls it made on AIG's Financial Products unit, was not the sole cause of the company's downfall. Drawing upon a host of sources—from Hank Greenberg to senior Goldman executives; current and former AIG leaders and board members; to legendary short-seller Jim Chanos and Federal Reserve officials—Boyd makes a compelling case that AIG's collapse was an inside job. It took several generations of tireless work and measured risk-taking to build AIG into a AAA-rated juggernaut, but it took only a few years of profit and bonus chasing from a handful of previously unknown executives to bring the world's most important company to its knees.

A cautionary tale of corporate hubris and the enthralling, never-before-told story of how an insurance company became a central player in the global financial meltdown, Fatal Risk is must reading for market insiders, investors, business leaders, and anyone who's wondered what really happened in 2008.


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Customer Reviews

That is the best general book yet written on the crisis.
John Hempton
And in some sense it was neither a suicide nor a murder, because AIG is not dead, but still in business, as are its parts that have been sold off.
Ira E. Stoll
Great read for anyone who wants to understand the complexity of finance in the world today.
AU

Most Helpful Customer Reviews

68 of 71 people found the following review helpful By PAUL BRADSHAW on March 28, 2011
Format: Hardcover Verified Purchase
If you followed the 2007-2009 subprime crisis you may think that you know most of the story of AIG's collapse. However, as is frequently the case, there is a lot more to the story than the simplified media narrative. "Fatal Risk" is a well-researched and highly readable account of the whole story behind the AIG disaster. The author Roddy Boyd clearly had excellent sources and there is a great deal of information here that you will not find anywhere else. The subprime mortgage affair was such a huge, global crisis (as Roddy Boyd puts it in this book, it was as though "the entire Western world was one big, highly leveraged real estate trade") that books covering the crisis as a whole (such as Michael Lewis's excellent "The Big Short") simply do not have the space for the detailed account of AIG that is "Fatal Risk".

Of course, any book about AIG has to tell the story of the remarkable Maurice "Hank" Greenberg, who was CEO of AIG from 1968 through 2005. Starting with a "far-flung and not terribly profitable" business, Greenberg built AIG into the largest and most respected insurance company in the world. We learn the story of how Greenberg served in World War 2 (landing on Omaha Beach on D-Day and participating in the liberation of the Dachau concentration camp) and in the Korean War, and how three days after his discharge he talked his way into an entry-level insurance job in New York, rose quickly through the ranks, and ended up at AIG a few years later. The book also tells the story of how the capital markets subsidiary AIG Financial Products (AIG-FP) was established in 1987, as a joint venture with the "absurdly intelligent" Howard Sosin, formerly of Drexel.
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21 of 23 people found the following review helpful By David Merkel on April 4, 2011
Format: Hardcover
Note: in addition to this review, there is a special Q&A with Roddy Boyd over at my blog.

See: [...]

=--==--==-=-=-=-=-=-=-=-=--=

When I came to work at Provident Mutual, I gained a friend who reported to me. Roy was a real character. He had his rules for life, and they all made sense to some degree. When he opined on why we did business the way we did in the pension division, he would say,"We're the good guys. We are out to save the world for 0.25% on assets plus postage and handling."

I like working with the good guys; that is my style, if I can achieve it. Too many are purely out for personal enrichment, leaving aside the harm/good they do to others.

Roddy Boyd is one of the good guys. If you haven't read his stuff before in the papers/magazines in which he has written, you will benefit from his book on AIG.

This book has some real insight to it. It focuses on the years where AIG stopped being a mere insurer, and started being a player in the capital markets.

That said, it contains new data on M. R. Greenberg, especially regarding his war years. I found it very insightful, and helped me understand why he was the boss that he was. (I worked at AIG 1989-1992.) He was one tough man in both war and business.

Boyd interviewed as many as would talk with him, and excluded material that would not be confirmed by two parties. I felt that was an ethical way to deal with information not yet publicly known.

The driving force behind AIG's push into financial services was a need for income uncorrelated with the P&C insurance cycle.
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8 of 8 people found the following review helpful By avidreader on October 26, 2011
Format: Hardcover
So I will start this review by stating that this is the first review I've ever written for Amazon (despite purchasing MANY books from this site), I'm familiar with some investment terminology, and I know (either professionally or through a friend-of-a-friend) some of the people in this book. Therefore, I was extremely curious to read a reporter's theoretically unbiased take.

I decided to write this review because
1) the book was HARD to read. Not just because of the investment terminology, which can be truely difficult to understand, but it was something to do with sentence structure, chronology or other. More than once I had to re-read whole pages to figure out what happened or what Boyd was talking about.

2) the story is not unbiased at all. You can tell who gave Boyd interviews by how he describes their "faults". And he has stories about the most random, unimportant people in a department, clearly showing that John/Jane Doe gave the interview because otherwise they would NOT factor into this story. And by the way, some of the random people (with Boyd's help) inflated their roles in this overall story.

Overall, I hoped for a good, unbiased read from a reporter chronicling the AIG story, and that's not what I got. I didn't entirely dislike, or disagree with, the book, but I also would not recommend it.
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7 of 7 people found the following review helpful By James Macdonald on August 11, 2011
Format: Hardcover Verified Purchase
The 13 reviews on this book - through early August 2011 - are generally FAR too positive. This book is definitely in no way the best book out there on the financial crisis. Not even close. It is also not a book about the "suicide" of what was unquestionably a great American company. There is not one shred of reporting of any intention to inflict any damages from within any part of the AIG, let alone the demise of the company (which of course never occurred thanks to US taxpayer bailout money). In general, I also found the book to be too positive and slow to criticize Goldman Sachs or AIG during the Greenberg years. In reality, it is as much a book about Goldman as it is about AIG.

Also on a negative note, this book also reads more like a draft for editorial review than an final document ready to be published. Too many typos and unreadable sentences hamper to readability of the book.

However, on a positive note, this is easily the best account of what went wrong at the AIG. There are new insights here about the AIG that are not present in any other text. Here are my takeaways, in order of importance.

1. Lack of focus on risk.
Boyd wisely focuses on the basic problem in FP's decision to sell the AAA financial rating of AIG's balance sheet for a small sum (11 basis points) with almost no critical evaluation of the risk of a individual deal exploding and a flawed assumption regarding almost zero risk of a systemic loss to the total FP CDS portfolio, i.e. that the probability of no loss was 99.5% and that it would require a recurrence of the Great Depression and the 1929 Crash to a correlated loss.
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