Customer Reviews

Operational Risk with Excel and VBA: Applied Statistical Methods for Risk Management (Wiley Finance)

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A valuable reference for understanding operational risk. Operational Risk with Excel and VBA is a practical guide that only discusses statistical methods that have been shown to work in an operational risk management context. It brings together a wide variety of statistical methods and models that have proven their worth, and contains a concise treatment of the topic. This book provides readers with clear explanations, relevant information, and comprehensive examples of statistical methods for operational risk management in the real world.

Remember in school when you had to solve math problems about how long it would take John to drive the 200 miles from New York to Washington if he drove at 50 miles an hour and took a one hour break for lunch? Or how long would it take John to meet Julie who was driving at 45 miles per hour from Washington to New York?

Now, would it make sense to call a book of these problems "Learning to Drive By Using Math"? That's the feeling I got when I closed Operational Risk With Excel and VBA. It's actually a good overview of many of Excel's statistical functions and it presents these in an operational risk context. However, it overemphasizes the technical and quantitative aspects of the field.

The Basel committee defines operational risk as "the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events". Of course the quantitative aspects are important, but operational risk is much more about analyzing processes and managing people and Lewis's book is weak on that aspect. To be fair the title is quite clear: the book is about applied statistical methods, not about people management.

Vincent Poirier, Tokyo

This book give you just a partial statistics theoretical review and it lack of solid exercises . The CD is very limited and the examples are simple. It lack of data base in order to applied the statistics methods. Also, it does not have all the VBA formulas in a chapter or in a CD that you can load to your computer in order to do your own practical cases.
I sent an e-mail to the author in order to get data in several exercises in order to run a logistic and linear regression but I never received a replied from the author. He print in a book limited data that you can not run any regression method and therefore it is worthless the examples in the book because you can not do it.

This books try to give a simple review of the statistical technics for operational risk, but it is not so clear, not so well explained and not so complete. Sometimes I found mismatch in formulas with the current literature. Six pages for EVT is a poor way to introduce such an important field in OR modelling, and there is nothing about copula approach for modelling dependence in OR. Conversely, this book is good in explaining regression applied to OR management, and somebody can find the CD very interesting for data application.

The book is a bad resume of statistics, full of mistakes. I've a long list of mistakes if required. You'll never learn operational risk with this one.