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Exploring The Nature Of Risk

David X. Martin

By Rabbi Yair Hoffman

It is rare for a person to be able to rise to the top of his field. Rarer still is the ability to rise and excel in two entirely different areas. Yet with the recent publication of two altogether different types of books, we can observe this phenomenon in one of our own Five Towns residents, David Martin.

One thing David Martin does is rescue Hebrew seforim from oblivion. Whether it was the printing of the Shavil HaYashar, a rare commentary on the Rif culled from a handwritten manuscript, or a reprinting of Rav Chaim Volozhin’s halachic practices, or a translation of the Sifsei Chachamim, a super-commentary on Rashi, Mr. Martin’s work in the area of ensuring that these precious gems of Torah remain within the grasp of those who study Torah is crucial.

Another area in which Mr. Martin has distinguished himself is in the field of risk management, and in the ability to explain what that is to those who need to understand it most. What is risk management? It is identifying and assessing the underlying risks inherent in any venture. It is the science and art of prioritizing that risk and coordinating and applying resources to minimizing and controlling those risks.

And risk can come in many colors. In David Martin’s latest book, The Nature of Risk, he manages to convey the concepts involved in risks and help the reader identify how risk-averse they are, and how risk averse they should be. Should we buy that condo? Or should we wait until business picks up a bit?

The first lesson of The Nature of Risk is to know what you really feel and want in terms of risk levels. Martin creates an endearing short story where he introduces seven animals (a red squirrel, a rabbit, a rat snake, a woodpecker, a gray squirrel, a turtle, and a red fox) as well as a herd of white-tailed deer and a colony of beavers. These animals are you and I—with our vastly different approaches to risk management.

In the beginning of his book, Mr. Martin informs us that no animals were hurt in the research and testing of the theories espoused in the book. He then proceeds to explain that the book developed in an attempt to assist the family of a friend who tragically passed away. Mr. Martin hit upon an important notion: All of us—everyone from the president of the United States to a widow wondering how to provide for her family—could use a primer on risk.

Could President Obama have saved himself from the debacle in Libya where Chris Stevens and three other Americans were coldly assassinated? He might have benefited from some basic risk assessment in choosing where and when to dispatch marine guards.

And David Martin is certainly the person to teach it. He was founding chairman of the Investment Company Institute’s Risk Committee; co-chair of the Buy Side Risk Committee (composed of the chief risk officers of the 20 largest asset-management firms); and a member of the sanctions subcommittee of the U.S. Department of State’s Advisory Committee on International Economic Policy.

Presently an adjunct professor at NYU’s Stern School of Business, he has published numerous white papers on compliance and risk, enterprise risk management, corporate governance, and cybersecurity, as well as Risk and the Smart Investor, published by McGraw-Hill in the fall of 2010.

While chief risk officer at AllianceBernstein, Mr. Martin also served as a director of Sanford Bernstein LLC. In those capacities, he was responsible for the oversight of over $875B in assets and was a member of the firm’s committees on ethics, internal controls, compliance, fraud, business continuity, and information security and chaired the valuation and new-product approvals committees. He has participated in innumerable industry conferences as a featured speaker and expert panel member, and has provided market commentary for Bloomberg Television.

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Posted by on October 18, 2012. Filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.