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Cover Page; Title Page; Copyright Page; Contents; Preface to the Princeton Science Library Edition; Preface to the 2002 Edition; Chapter 1: Financial Crashes: What, How, Why, and When?; What Are Crashes, and Why Do We Care?; The Crash of October 1987; Historical Crashes; The Tulip Mania; The South Sea Bubble; The Great Crash of October 1929; Extreme Events in Complex Systems; Is Prediction Possible? A Working Hypothesis; Chapter 2: Fundamentals of Financial Markets; The Basics; Price Trajectories; Return Trajectories; Return Distributions and Return Correlation

A mean field version of the Burridge-Knopoff block-spring stick-slip model of earthquake faults is mapped onto a cycled generalization of the democratic fiber bundle model (DFM). This provides an exactly soluble model which describes the set of earthquakes preceding a major earthquake. We find the coexistence of 1) a differential Gutenberg-Richter distribution d(Δ)∼Δ-3/2 of bursts of size Δ, with a cut-off Δmax ∼(σr-σ)-1 as the stress σ↦σr and 2) a run away occurring at a well-defined stress threshold σr. The total number of bursts of size Δ up to the run away scales as D(Δ)∼Δ-5/2. The exponent 5/2 reflects the occurrence of larger and larger events when approaching the run away instability (Omori's law for foreshocks). The Gutenberg-Richter and Omori power laws are not associated with a stationary criticality but to fluctuations accompanying the nucleation of the run away. Introducing long range correlations in the model lead to a continuous dependence of the above exponents as a function of the correlation exponent.

This book discusses the risks of information concealment in the context of major natural or industrial disasters - offering detailed descriptions and analyses of some 25 historical cases (Three Mile Island nuclear accident, Bhopal disaster, Challenger Space Shuttle explosion, Chernobyl nuclear disaster, Deepwater Horizon oil spill, Fukushima-Daiichi nuclear disaster, Enron's bankruptcy, Subprime mortgage crisis, Worldwide Spanish flu and SARS outbreaks, etc.) and applying these insights to selected on-going cases where such information concealment is suspected. Some successful examples of preventive anti-concealment practice are also presented. In the book, the term 'concealment' is used to represent the two distinct behaviors uncovered in the investigations: (i) facts and information about an organization and its functioning being hidden from those that need them - here the concealment can be due to various factors, such as complexity and miscommunication, to name but two - and (ii) the conscious and deliberate action of keeping important information secret or misrepresenting it. This second meaning makes up a surprisingly important part of the evidence presented. Accordingly, emphasis has been put on this second aspect and the approach is more pragmatic than academic, remaining focused on evidence-based practical and useful factors. It raises awareness and provides valuable lessons for decision- makers, risk specialists and responsible citizens alike. This work is also intended as a fact-based reference work for future academic and scholarly investigations on the roots of the problem, in particular regarding any psychological or sociological modeling of human fallibility

Offering an original treatment of the domains of Portfolio analysis and optimization, along with the associated risk assessment and management, this book focuses mainly on the concepts and tools that remain valid for large and extreme price moves. It also places strong emphasis on the theory of copulas and their empirical testing and calibration