The Illusion of Control: Why Financial Crises Happen, and What We Can (and Can't) Do About It

  • 10h 41m 6s
  • Jon Danielsson
  • Recorded Books, Inc.
  • 2022

A challenge to the conventional wisdom surrounding financial risk, providing insight into why easy solutions to control the financial system are doomed to fail

Finance plays a key role in the prosperity of the modern world—but it also brings grave dangers. We seek to manage those threats with a vast array of sophisticated mathematical tools and techniques of financial risk management. Too often, though, we fail to address the greatest risk—the peril posed by our own behavior.

Jón Daníelsson argues that critical risk is generated from within, through the interactions of individuals and perpetuated by their beliefs, objectives, abilities, and prejudices. He asserts that the widespread belief that risk originates outside the financial system frustrates our ability to measure and manage it, and the likely consequences of new regulations will help alleviate small-scale risks but, perversely, encourage excessive risk taking. Daníelsson uses lessons from past and recent crises to show that diversity is the best way to safeguard our financial system.

About the Author

Jón Daníelsson is a professor of finance and the director of the Systemic Risk Centre at the London School of Economics. He is the author of Financial Risk Forecasting and Global Financial Systems: Stability and Risk.

In this Audiobook

  • Chapter 1 - Riding the Tiger
  • Chapter 2 - Systemic Risk
  • Chapter 3 - Groundhog Day
  • Chapter 4 - The Risk Panopticon
  • Chapter 5 - The Myth of the Riskometer
  • Chapter 6 - Ideas Matter: Risk and Uncertainty
  • Chapter 7 - Endogenous Risk
  • Chapter 8 - If You Can’t Take the Risk, Change Riskometers
  • Chapter 9 - The Goldilocks Challenge
  • Chapter 10 - The Risk Theater
  • Chapter 11 - The Uniformity, Efficiency, and Stability Trilemma
  • Chapter 12 - All about BoB: Robots and the Future of Risk
  • Chapter 13 - The Path Not to Take
  • Chapter 14 - What to Do?
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