In the Nature of Risk, David X Martin uses an easily understood fable to explain the often overlooked and misunderstood concepts of risk management, simplifying them into clear messages for all audiences. Readers are sure to appreciate the lessons learned from this unique tale.

Ajay Banga
CEO, MasterCard 

With The Nature of Risk David X Martin has done what countless others have tried and failed to do—that is, make the basics of risk management not only easy to understand, but entertaining too.

William R. Rhodes
Former Senior Vice Chairman, Citigroup
Author of Banker to the World (McGraw-Hill 2011)



The Nature of Risk is an easy-to-understand, entertaining, and memorable story designed to help readers face one of modern life’s most important and difficult tasks—confronting risk. Free of complicated theories or formulas, The Nature of Risk relies instead on a cast of familiar, forest-dwelling animals, each of which embodies a different approach to risk management. At least one of these approaches will seem familiar to every reader—whether they knew they had an approach to risk management or not. Then, as the narrative unfolds, the strengths and weaknesses of each approach will be revealed as they are put to a series of natural tests. Finally, at the conclusion of the story, readers will find a short review section designed to help them frame their first attempts at managing risk—with or without professional help.

Risk management is complex, multi-faceted and challenging, for novice and experienced practitioners alike. The more education, intelligence and perspective that can be brought to bear on the process, the better, says David X Martin.

To that end, the veteran risk manager has produced a unique learning tool in the form of a self-published book, “The Nature of Risk.”


Currently a senior risk adviser at consulting firm Oliver Wyman and an adjunct professor at New York University’s Stern School of Business, Martin has worked at investment firm AllianceBernstein and for noted members of Citigroup’s top management, including past chairmen Walter Wriston and John Reed and senior vice chairman William Rhodes. Martin was also founding chairman of the Investment Company Institute’s risk committee.

While amassing those credentials, Martin came to realize that practical primers on risk management — that could be of use both to aspiring professionals and to members of the general public who may not have thought too hard about financial and safety concerns — were lacking. He found little in the way of books, films or online resources that could help introduce risk and risk management to, say, board members, clients, nonprofessionals or even children.

“People don’t talk about risk, and I thought it would be helpful to give people a framework to start to talk about it,” Martin explains.

Written as a fable “for those of you who believe it’s still possible to make sense of the world we live in,” as Martin says in the introduction, the book carries testimonials from the likes of BlackRock chief risk officer Bennett Golub and Oliver Wyman Group CEO John Drzik. Another, former Citi colleague Rhodes, author of the 2011 book “Banker to the World,” writes that Martin has succeeded where others have not, and makes “the basics of risk management not only easy to understand, but entertaining too.”

Katherine Heires ( for

The singer of the infamous Dr. Dolittle song of years ago longs to “talk to the animals” to learn the animal ways. Instead of talking to animals, how about a book to learn risk management from the animals?

It has nothing to do with Dr. Dolittle, but David X. Martin’s short book The Nature of Risk takes the reader on a visit to an imaginary forest to learn the animals’ methods of planning for and reacting to different levels of risk.


Doing what comes naturally

The book’s subtitle asks: “Are you a bear, a squirrel, a turtle, or a fox?”

And this gives a taste of what you’ll be in for if you pick up Martin’s amusing and instructive work. Martin is now a senior advisor at Oliver Wyman, and before that served in posts at AllianceBernstein LP–including an eight-year tenure there as chief risk officer.  Earlier experience included nine years in risk management at Citibank.

Martin’s book is a fable, but one that easily shows different methods for handling and planning for risk (or the lack thereof) and how each level of risk management is played out during times of crisis. In The Nature of Risk the crisis comes in the form of a brush fire, and then a major forest fire.

Martin injects humor at various places in the book. His author’s note at the beginning not only provides a chuckle before reading, and for contemplating after the story is over, but piqued my curiosity to quickly join the forest animals as they deal with risk.

“While no animals were intentionally harmed in the telling of this story, a number of them will be unavailable for the sequel.”

-Will Taylor

Please click on this link for the full article in the ABA Banking Journal.

David X Martin will join a panel on The Role of Volatility at the IMN’s Global Indexing and ETF Conference in Scottsdale, AZ on December 8, 2013.

If we think about risk at all, we usually think about active risks. For instance, we might weigh the risk of buying stocks instead of bonds, or the risk of buying a house instead of renting one. Looked at in this way, taking a risk requires some action on our part, whereas doing nothing is safe.

But is this true? Is inaction safe, and action necessarily riskier? In The Nature of Risk, some of the animals of the forest attempt to avoid risk at all costs, while others, foreseeing difficulties, weigh the risks of action against the risks of inaction.

Are you a red squirrel, or a beaver? Read The Nature of Risk and find out.













Those who wrangle daily with risk can often provide insight to the broader nature of uncertainty, peril and payoff.
In the investment realm, David X Martin, a senior adviser at management consultancy Oliver Wyman, has written…The Nature of Risk, a short parable for newer investors which portrays different types of risk-takers as forest animals, showing the strengths and weaknesses of each.
-Sue Shellenbarger, The Wall Street Journal

David X Martin’s The Nature of Risk

Several weeks ago I read a review of David Martin’s The Nature of Risk in the RMA Journal and bought a copy. It is a brief (75 pages) Aesopian fable on the nature of risk as seen through the eyes of numerous animals: red and gray squirrels, rabbit, beaver, bear, turtle, deer, eagle, rat snake, woodpecker and a fox. The fox, of course, emerges as the most risk-aware of these creatures, reminding me of Archilochus’s famous adage about the Fox and the Hedgehog and Isaiah Berlin’s noted essay on the same subject.

Faced with, first, a modest brush fire and, later, a major forest fire, each animal has a story of  “instinctual approaches to survival” as they “balance risk and reward,” most poorly and a few well. Some avoid risks, some “run with the herd,” some are oblivious, and some “change their approach so often that they really don’t have an approach at all.”

The Red Fox, the heroine (a woman, naturally!), “constantly reassesses the risks” around her and, as well, keeps “an eye out for opportunities.” The Beaver is also an opportunist.

Martin, an adjunct professor at NYU’s Stern School of Business and a former Chief Risk Officer at a major international investment firm in New York City, offers three conclusions:

  1. Life without risk is a contradiction in terms.
  2. Risk management is a “process.”
  3. Conditions around us change continually, and therefore so do the risks.

Brief, simplistic, but amusing.

 Felix Kloman, Seawrack Press 



Most of us, like the animals of the forest, devote our lives to learning about the world around us. We do this so we can make our way through that world safely and productively, enjoying whatever small pleasures we can along the way.

Alone among the animals of the forest, the beavers create the world they live in. They take down trees, dam streams, store food, and build lodges to protect themselves from their predators. And in doing so they create wetlands that provide habitats for other animals, including turtles, frogs, and waterfowl. Their construction projects also reduce flooding and drought, and filter the water that flows through them.

Do you live in the world you find, or create a world of your own?



Recognizing risk isn’t easy. And once you recognize it, understanding what to do about it is even harder. Actually managing risk is harder still.

But it’s not impossible. And while you don’t have to do it all at once, you do need to start somewhere, and that’s why I wrote The Nature of Risk.

At the heart of this short, beautifully illustrated book is a simple story. In a forest valley far from the city a group of animals go about their lives, each approaching risk in a different way. Then, when a series of natural disasters strike the valley, the strengths and weaknesses of each animal’s approach is revealed.

No formulas, no rules, no complicated theories. Just a short, amusing story designed to make it easier for you to start thinking aboutBuckSPOT your own approach to risk.

Are you a bear, a squirrel, a turtle, or a fox? Read The Nature of Risk and find out.

Most people find it hard to talk about risk. It’s almost as if they think that discussing risk is a risk itself.

But of course the opposite is true. Going through life without acknowledging the risks you’ll face as you try to reach your goals, and without acknowledging the way your own ‘natural’ approach to risk influences your decisions, is one of the most dangerous and unnecessary risks you can take in life. Only by acknowledging that you have to take some risks to reach your goals, and that you have to take your own ‘natural’ approach to risk management into account, can you set goals with any hope of reaching them. Equally important, you’ll sleep better, too.

Read The Nature of Risk, and find out whether you’re a bear, a squirrel, a turtle, or a fox.

In The Nature of Risk, a number of animals go about their lives in a small valley in the forest. And while each of the animals has his or her own “natural” approach to managing risk, many of them also depend on the eagle, which flies high over the valley, able to see things happening long before they can. This additional protection works very well—unless of course disaster strikes while the eagle is busy elsewhere. 1 Before

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