Financial Darwinism: Create Value or Self-Destruct in a World of Risk | 
 enlarge | Author: Leo M. Tilman
Creator: Edmund Phelps
Publisher: Wiley
Category: Book
List Price: $29.95
Buy New: $16.82
You Save: $13.13 (44%)
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Rating:  3 reviews
Sales Rank: 152321
Media: Hardcover
Pages: 172
Number Of Items: 1
Shipping Weight (lbs): 0.8
Dimensions (in): 9.1 x 6.2 x 0.9
ISBN: 0470385464
Dewey Decimal Number: 332.10681
EAN: 9780470385463
ASIN: 0470385464
Publication Date: November 10, 2008
Availability: Usually ships in 1-2 business days
Condition: BRAND NEW
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Product Description
In Financial Darwinism, author Leo Tilman lays the groundwork for understanding the new financial order by introducing his evolutionary thesis and then outlines an actionable decision-making framework that enables financial institutions and investors to fully leverage the power of business strategy, corporate finance, investment analysis, and risk management. Financial Darwinism is an invaluable road map to today's financial world and an essential guide to surviving and thriving during these challenging times.
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| Customer Reviews:
 Timely Advice December 3, 2008
James Mcritchie (Elk Grove, CA USA)
1 out of 1 found this review helpful
Just as global climate change has increasingly brought us more frequent "once in a century" weather events, increased competition and economic globalization have resulted in lower margins, increased commodification, and increased risk - leading to a similar pattern of economic volatility centered around our financial institutions.
Leo M. Tilman's Financial Darwinism: Create Value or Self-Destruct in a World of Risk paints a rather bleak picture. He sees systemic financial crises as a "permanent feature of the dynamic new world." This isn't a book for those looking for ideas aimed at governments attempting to reregulate the financial industry, although they would certainly benefit from the reading. Instead, the book offers very practical advice to bankers, institutional investors, and other businesses on how to build risk analysis into strategic decision-making.
In the old paradigm, the risk manager was brought in after major strategic decisions had already been made. In the new paradigm, "risk management becomes the very language of enterprise-wide strategic decisions going forward and that the chief risk officer becomes an executive who gets an equal seat at the table where corporate strategy is decided."
Tillman identifies at least ten forces contributing to this shift, including:
- Globalization
- Inflation targeting and control by central banks
- Disintermediation
- Greater availability of information
- Greater financial market efficiency
- Alternative investment vehicles
- Financial deregulation
- Convergence of traditional financial businesses
- Increasingly complex instruments, such as derivatives and structured products
- Advances in technology, financial theory, analytics and risk management
In the simplest formulaic terms we have gone From: Economic performance = return on assets - cost of liabilities + fees - expenses - cost of capital
To: Economic performance = balance sheet arbitrage + principal investments + systematic risks + fees - expenses - cost of capital
Of course, that's just the beginning of the complexity. Tilman does an excellent job of explaining this paradigm shift, how we got here, what factors need to be examined going forward, and how they can be understood in relatively simple formulaic terms.
Financial Darwinism recognizes that our growing toolbox includes leverage, product design debt management, capital structure, M&A, insurance, securitization, hedging, asset strategies, etc. Each tool must be considered in developing and implementing strategy.
As the world places increasing emphasis on fair valuation, risk-based financial disclosure and risk-focused regulation, Tilman's guide becomes more important for CEOs, directors and fiduciaries who must build risk evaluation into all fundamental decisions.
 Fascinating, original, and desperately needed October 31, 2008
Rockwell Stensrud (Newport, RI USAs sv)
2 out of 2 found this review helpful
I was fascinated by the premise of Financial Darwinism and found myself agreeing with most of its conclusions and remedies. The subject matter is extremely timely right now. Investors, politicians, and financial people are struggling to understand the new financial world order. An astounding amount of leverage and risk was not at all visible before this crisis and resulting losses were surprising, to say the least.
The theory is solid and fascinating and is clearly a strong suit. This is why I couldn't wait to get to the "real life" examples presented in Chapter 5, which is the heart of the message. The case study of the current financial crisis illustrates why Tilman's theory works. This chapter makes getting through the detail in prior chapters, where the reader is trying to understand the implications of the book's ideas, worth it.
Notwithstanding somewhat excessive use of dashes (the author's amusing style quirk), the clarity of thought is impressive. As a journalist and personal investor, I was afraid that this book would only be understandable (and of use) to finance experts, executives, economists, and such. This was not at all the case - thanks to all the main points clearly laid out in the first chapter.
Despite the Darwinian message, it is likely this book will become the new "bible" for businesses and investors around the world.
"Survival is not mandatory" October 29, 2008
The Reader (NY, USA)
1 out of 1 found this review helpful
Is it really necessary to understand the ongoing tectonic financial shift and evolve, asks Financial Darwinism? Lehman, Fannie, Freddie, Bear Stearns, Countrywide, Wachovia, and AIG did not think so. "survival is not mandatory" is the core theme of this book. If nothing else, this statement is the evident fact of the current crisis.
Tilman's new book is a fascinating eye-opener that exposes what has been happening with capital markets and financial institutions over the past 20 years. I agree with Rubenstein's quote: this book "explains the tectonic shifts now underway in the investment world far better than any book I have seen to date."
The evolutionary thesis called Dynamic Finance is the first part. It explains how global forces have progressively pressured financial businesses and how this, in turn, changed the riskiness of financial firms and the behavior of financial markets. The major innovation here is that risk management language is used to explore issues like corporate earnings and strategy, macroeconomics, and investments. A whole new set of concepts is also introduced: risk-based business models, risk-based economic performance, and risk-based transparency. Even though most of the discussion is focused on financial institutions, all of this cannot be more relevant for non-financial corporations - just think of recent troubles with auction-rate securities, pension plans, and fx losses.
Tilman convincingly argues that a healthy amount of paranoia also won't hurt financial firms and their executives: they need to continuously evolve and strive to create value. Resistance to change inevitably leads to loss of busines`s, larger risks, and ultimately the extinction -- the crux of Darwinism. Financial executives must develop the new way of thinking about business models. Once this has been done, what will determine successes is their requisite risk management skills. The decision-making framework covered in the second half of the book should help this a great deal.
Tilman has conveyed original and far-reaching ideas in clear and knowledgeable ways. This book will spur a lot of research and discussion in the coming years.
Brilliant! A one-of-a-kind must read.
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