Against the Gods: The Remarkable Story of Risk

pkjha30 · #11 5th November 2007, 10:03 PM

Hi

It seems a fascinating book. A must read by all

Quote:

The Story chat I have to tell is marked all the way through by a per-
sistent tension between those who assert that the best decisions are
based on quantification and numbers, determined by the patterns of [he
past, and those who base their decisions on more subjective degrees of
behefabout the uncertain future. This is a controversy that has never
been resolved.

The issue boils down to one's view about the extent to which the
past determines the future. We cannot quantify the future, because it is
an unknown, but we have learned how to use numbers to scrutinize
whac happened in the past. But to which degree should we rely on che
patterns of the past to tell us what the future will be like? Which mat-
ters more when facing a risk, the facts as we see them or our subjective
belief in what lies hidden in the void of time? Is risk management a sci-
ence or an art? Can we even tell for certain precisely where the divid-
ing tine between the two approaches lies?

It is one thing to set up a mathematical model that appears to explain
everything- But when we face the struggle of daily life, of constant trial
and error, the ambiguity of the facts as well as the power of the human
heartbeat can obliterate the model in short order.