The Fat Tail: The Power of Political Knowledge in an Uncertain World (with a New Preface) |  | Authors: Ian Bremmer, Preston Keat
Publisher: Oxford University Press, USA
Category: Book
List Price: $16.95
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Rating:  44 reviews
Sales Rank: 253,271
Media: Paperback
Edition: Reprint
Pages: 272
Number Of Items: 1
Shipping Weight (lbs): 0.3
Dimensions (in): 9 x 6.1 x 0.8
ISBN: 0199737274
Dewey Decimal Number: 337
EAN: 9780199737277
ASIN: 0199737274
Publication Date: May 13, 2010
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Product Description
As Ian Bremmer and Preston Keat reveal in this innovative book, volatile political events such as the 2008 Georgia-Russia confrontation--and their catastrophic effects on business--happen much more frequently than investors imagine. On the curve that charts both the frequency of these events and the power of their impact, the "tail" of extreme political instability is not reassuringly thin but dangerously fat.
Featuring a new Foreward that accounts for the cataclysmic effects of the 2008 financial crisis, The Fat Tail is the first book to both identify the wide range of political risks that global firms face and show investors how to effectively manage them. Written by two of the world's leading figures in political risk management, it reveals that while the world remains exceedingly risky for businesses, it is by no means incomprehensible. Political risk is unpredictable, but it is easier to analyze and manage than most people think. Applying the lessons of world history, Bremmer and Keat survey a vast range of contemporary risky situations, from stable markets like the United States or Japan, where politically driven regulation can still dramatically effect business, to more precarious places like Iran, China, Russia, Turkey, Mexico, and Nigeria, where private property is less secure and energy politics sparks constant volatility. The book sheds light on a wide array of political risks--risks that stem from great power rivalries, terrorist groups, government takeover of private property, weak leaders and internal strife, and even the "black swans" that defy prediction. But more importantly, the authors provide a wealth of unique methods, tools, and concepts to help corporations, money managers, and policy makers understand political risk, showing when and how political risk analysis works--and when it does not.
"The Fat Tail delivers practical wisdom on the impact of political risk on firms of every description and valuable advice on how to use it. Ian Bremmer and Preston Keat offer innovative thinking and useful insight that will help business decision-makers find fresh answers to questions they may not yet know they have."
--Fareed Zakaria, best-selling author of The Post-American World
"Political risk has become increasingly complex, and The Fat Tail provides a truly new way to quantitatively assess it in established and emerging markets. It is essential reading for any CEO with multinational interests."
--Randall Stephenson, Chairman, CEO and President, AT&T Inc.
"Should be essential reading for anyone involved in international business even--perhaps especially--in places that seem politically stable."
--Bill Emmott, former editor-in-chief of The Economist
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Showing reviews 1-5 of 44
 Political risk may affect your investments August 13, 2009
Mariusz Skonieczny (Schaumburg, IL)
5 out of 5 found this review helpful
Investors may evaluate the current state of the economy and read the financial statements of individual companies, but few ever consider the political issues in their investment decisions. The authors of this book argue that the political climate is important to investing. Remember when Russia defaulted on its debt? This single event started the collapse of Long Term Capital Management, which almost brought the entire financial system to ruin.
The authors say because world trade is becoming more global, it is becoming more important than ever not to ignore political risk. I thought this book was worth reading.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
An Excellent Sequel February 25, 2009
Brian D. Hasbrouck (Brooklyn, NY United States)
4 out of 4 found this review helpful
What happens to a business whose product is misused by their home nation's geopolitical rival? This issue is tackled with the nuance and the necessary context to illustrate the importance that political risk plays in volatile markets. Without taking the time to invest in the proper insurance, the investors in Ingersoll Rand would have been left to incur much more significant damage then they ultimately had to. (2009, 56)
Anyone who reads Bremmer's blog on ForeignPolicy.com (http://eurasia.foreignpolicy.com/ ) realizes that even the most mundane political occurrences have effects that ripple across markets. Bremmer's J-Curve (also recommended) detailed how different societies go through democratization and how these transformations and the differences in regimes represent different levels of stability. I was excited to see he produced a book more focused on the economic ramifications of political unpredictability. My bias for Geopolitics is coming through b/c another example comes from his excellent chapter on the subject in regards to the "Iran Premium." (2009, 59) After it became clear Iran was stalling for a time and the evasive language President Bush used to not withdraw the right to use military force it seemed like a diplomatic problem was going to transform into an armed one. Of course the Strait of Hormuz only magnified the problem that a second OPEC nation might become involved in a military conflict with the United States. This anecdote shows the importance that political risk and instability plays in global markets and how understanding these nuances can assist investing. As is detailed later on in the book even if one knows when a détente is reached using that information profitably is another matter, but without the first part of that equation the second is compounded even more.
His summary of the main schools of IR is excellent, coming from a former student who has had to expand on them in seemingly every IR course he took. For anyone interested in his series about the Great Game here's the link to his Davos event: http://gaia.world-television.com/wef/worldeconomicforum_annualmeeting2009/default.aspx?sn=7003&lang=en. Also, I would suggest a book Bremmer edited with Ray Taras, "Nations and Politics in the Soviet Successor States."
One characteristic of good books (at least in IR, not so much in fiction) is copious citations from respected journals and other literature in the field. At 42 pages the Notes section includes journals such as International Organization, Financial History Review, International Security, and Niall Ferguson's seminal history about the Rothschild Banking House. (His "Ascent of Money," "Pity of War," and "Empire," are also all excellent) Heavy use of Taleb's "The Black Swan" has prompted me to purchase that book, as well. My only complaint is that the endnotes weren't footnotes, but no one else seems to care about this but me. (Long live Chicago Style!) Good thing Border's gives out two receipts with every purchase!
Another reviewer suggested that the book posited a defense of the Bush Doctrine (so famously summarized by Sarah Palin). Hardly. The book offers two examples of preemption, one of which was successful, Israel in 1967, and one of which is more ambivalent, US involvement in Iraq. These occurrences show that quick judgments of political activities are often vacuous and can lead to disastrous results for investors.
A final note: I've never seen a book reviewed by Nouriel Roubini ("Dr. Doom"), Robert Kagan, and Thomas Pickering. Hear, hear!
Valuable insights, well organized primer March 3, 2009
Jonathan Brown (Fair Oaks,, CA USA)
4 out of 4 found this review helpful
The Fat Tail: The Power of Political Knowledge for Strategic Investing
We live in an increasingly inter-connected world. The benefits from those connections are huge. But there are also costs. Ian Bremmer and Preston Keat have put together an excellent primer on how to anticipate those unexpected events that political and increasingly economic players around the world need to think about strategically.
The book opens with three chapters on dealing with uncertainty including a brief introduction to geopolitics and the relationship of political risks to capital markets. It then goes through discussions on domestic instability, terrorism, expropriation and regulatory risk. Each of the chapters explain the issues and then present some useful examples of the risk and some alternative ways of thinking about the problem.
The concluding chapter argues that players in the international arena need to think carefully about how to gain information and to discover warning signals.
All that is crammed into a highly readable book of less than 200 pages. There are areas where I wish the authors would have expanded a bit on their explanations or knowledge but as an excellent sourcebook to get policy makers and investors to think about dealing with uncertainties in the world it is an excellent first step.
I could see the book being used in college classrooms on international business and international relations. I could also see it being used in a corporate setting for giving corporate leaders a good basic understanding of risk management in this area.
Necessary For The Investor And Student of Political Science March 5, 2009
Jeffrey Peter A. Hauck (Pennsylvania USA)
4 out of 4 found this review helpful
Review of "The Fat Tail" by Ian Bremmer and Preston Keat.
For anyone interested in military history, political science, or strategic investing and risk management this is the book to read.
The authors take the world as it is and identify the wide ranging political risks to investment. They put forth an effective way to analyze, evaluate, and predict those risks and thus warn potential investors and offer guidance how to manage those potential risks.
Grounded in historical and contemporary examples and replete with numerous footnotes to bolster their contentions the authors cover the ground dealing with uncertainty in the financial and future markets; geopolitics; political risk; domestic instability, revolution, civil wars, & state failures around the globe; terrorism; expropriation; and regulatory risks.
Well done. An ancillary benefit is the outlining of western business interests and thus an understanding of our nation's own financial predicament. Clear, concise, and understandable by the layperson at 240 pages I rate it at five stars without reservation.
JP
Fascinating must read book for news junkies June 18, 2009
A. D. Boorman
4 out of 4 found this review helpful
I did not come to this book to be surprised. I understood the basic concept before I even opened the book: Politics and economics are interrelated. They use the simple aphorism "political risk matters.'
I knew that. What I did not understand was HOW
This book did not make me an expert in the interaction of economics(local, national, and world) on economics (same scopes), but it did give me a framework in which to examine and evaluate world events. Anybody who has taken a business stat course knows that risk = damage X probability. This book evaluates that risk in terms of the unforseen risks, what former Secretary of Defense Rumsfeld called "unknown unknowns.' There are those unexapcted events whose occurence change everything. How do people evaluate risk in terms of those unforseen political events?
That is what this book is about. It is concise. It is easy to read. The authors describe their principles, and explain them in layman's terms. They cite historical examples and explain them in detail.
It's an interesting book for news junkies. If you're one of those people who always has to watch multiple news reports and reads the news and the editorials before the sports and the comics, then you will enjoy this book. It will give you tools that you WILL use.
Showing reviews 1-5 of 44
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