Dangerous Markets
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DANGEROUS Markets: Managing in Financial Crises

As the economy grows more global, the impact of financial crisis in any country has come to affect us all. Corporations fail, the stock market and currency values fall, deposits are at risk, pension plans are lost, and, in some cases, even civil unrest follows. In short, these crises can no longer be ignored. In their new book, DANGEROUS MARKETS: Managing in Financial Crises (Wiley Finance; October 2002; hardcover) Dominic Barton, Roberto Newell, and Gregory Wilson tell how to anticipate, manage, and prosper in financial crises around the globe.

The authors draw on their work with McKinsey & Company in assisting corporate and public officials to overcome the effects of financial crises in more than a dozen countries, including the United States, Thailand, Korea, Indonesia, Jamaica, Mexico, Ecuador, Colombia, and, most recently, Argentina. Their approach, developed on the front lines of managing through financial crises, walks corporate executives and investors through the five crucial steps to survival and success. They demonstrate how to:

• Understand fully the warning signs of crisis and the risks associated with them

• Aggressively execute the tactics demanded to weather the first 100 days of a crisis

• Design a portfolio of strategic initiatives that leverages new freedoms and captures “one-time” opportunities created by crisis conditions

• Manage unique risks for banks through aggressive turnarounds and excellence in recovering nonperforming loans (NPLs)

• Build for the future, by setting new, market-oriented standards and safeguards to avoid subsequent crises and lessen their impact.

The authors believe that financial crises are likely to become more frequent, more costly, and longer-lasting in the future. The reasons are wide ranging – from continuing value destruction in the real economy, to poorly supervised banking systems, to inadequate capital markets, and inefficient linkages to the global system. In particular, the authors examine the current weaknesses in Japan, China, India, and elsewhere that could soon have major geopolitical and economic consequences.

“In short,” say Barton, Newell, and Wilson, “financial crises are simply too important and too costly to shareholders and societies to leave unmanaged.” DANGEROUS MARKETS is both a blueprint for surviving and flourishing in crises as well as a call to action for both corporate and government officials to reform their financial systems before devastating problems hit.

Testimonials for “Dangerous Markets”

DANGEROUS Markets: Managing in Financial Crises

“The authors address an issue of enormous importance in today’s volatile world. They emphasize the critical role that the management of financial institutions can play, not only in leading their own institutions through choppy waters, but in helping to shape the development of more robust financial systems.”
    Peter Sands, Group Finance Director, Standard Chartered Bank

“Financial crises are hardly limited to the purview of central bankers and regulators. The authors skillfully demonstrate that financial crises offer both peril and promise. A ‘must read’ for top management of any global company, whether a financial or nonfinancial institution.”
    Ronald P. O’Hanley, Vice Chairman, Mellon Financial Corporation

“The authors of a new book titled Dangerous Markets have created an intriguing methodology to spot pre-crisis warning signs and have devised some practical solutions as to how to companies and countries can best deal with financial crashes once they have occurred.”
    John Thornton, Financial Times, December 30, 2002.

“based on their vast experience in financial crises around the world during recent years, the authors have developed an impressive review of the origins of and solutions to financial crises. The cost of such crises can be minimized and the path to recovery established earlier if bankers, other corporate executives, and public finance officials take advantage of this effort and apply the lessons learned from their significant work.”
    Charles Dallara, Managing Director, Institute of International Finance, former Assistant Secretary for International Affairs, U.S. Treasury Department

Dangerous Markets is a ‘must read’ in the current global environment for all serious investors and senior executives. The McKinsey authors bring a unique practitioners’ perspective to the challenges of anticipating, managing, and succeeding in financial crises, and close with an intriguing call for leading private sector players to step up their role in promoting new market standards and structures to help avoid future financial crises and minimize their potential impact.”
    Hon. Robert R. Glauber, former Chairman and CEO, NASD, former Under Secretary, U.S. Treasury Department, and former Harvard Business School professor

“Worried about a financial crisis in your country? Why not host a dinner party? That is one of the few whacky suggestions in a decidedly unwhacky new book by three employees of global consultants, McKinsey & Co. Their book concludes that financial crises like the one that swept Asia in 1997 and 1998 have become more frequent in the past decade or so and will become more frequent still as developing countries enter the global economy.

“. . . The authors say that if spotted in advance, properly prepared businesses and investors can profit from a crisis. That preparation includes doing your own intelligence on the state of the economy by whatever means available, including hosting dinner parties with bankers, economists, local business leaders, politicians and (they really say this), the ‘local correspondent from the Wall Street Journal.’”
    Phillip Day, Wall Street Journal Europe, October 14, 2002

“As a member of the private equity investment community, I recommend Dangerous Markets to all members of the world business community. Their insights provide valuable lessons, which if applied can make the world markets much more efficient and stable.”
    Steven Lee, Partner, Lone Star Fund

“Barton, Newell, and Wilson provide new and important insights into financial crises based on their extensive and successful work with private financial institutions and with governments. They offer clear and persuasive guidance on how best to avoid crises, how to see them coming, and what to do when they happen. This is best-practice counsel from three leaders in the field. They have worked in the trenches, and bring a vital private sector perspective.”
    Dr. Martin N. Baily, Senior Fellow, Institute of International Economics, former Chairman of the Council of Economic Advisers

“The book results from a fresh and imaginative approach to financial crises in the past few years, particularly from a corporation’s standpoint. The insights are precious to top executives as well as regulators and academics; in fact, the book provides a very skilled demonstration of the value of dialogue between all interested parties on the issue of financial crises. Since the focus of such crises is now moving toward nonfinancial corporations, the book becomes even more timely and important.”
    Gustavo Franco, Partner, Rio Bravo Investments, former Governor of the Central Bank of Brasil

“One particular book is very popular in German banking circles at the moment: Dangerous Markets. It deals with the warning signs relating to financial crises, the momentum associated with them and the ways of dealing with them. Dominic Barton, Roberto Newell, and Gregory Wilson – are crisis experts at management consulting firm McKinsey. This publication . . . provides a riveting insider report on system crises in newly industrialized countries and financial difficulties in the banking sectors of G7 states.”
    Handelsblatt, February 21-22, 2003.

“Based on their unparalleled experience consulting during financial crises, Barton, Newell, and Wilson offer a fresh perspective on such episodes. The microeconomic focus - as opposed to the conventional macro view - provides important new insights into the difficult art of forecasting and surviving these storms.”
    Dr. Jose A. Scheinkman, Theodore Wells ’29 Professor of Economics, Princeton University

Dangerous Markets: Managing in Financial Crises . . . address this question and attempts to come up with a praxis for navigating through these financial tempests. . . . It is highly readable – a leisurely weekend would be just enough . . . The structure is a paint-by-numbers sort of management tome, a design much beloved by the too-busy-to-read manager.”
    Noel G. Reyes, Business World, October 16, 2002