The remarkable story of rick

Jessica Scott reviews Peter L. Berstein’s book Against the Gods: The Remarkable Story of Risk which, after a study of the history of man’s attempts to come to grips with the management of risk, concludes that attitudes about risk which evolved over the past 800 years led to the development of modern society with its science, capitalism and democracy.

Peter L. Bernstein writes of the history of Risk, chronicling each changing concept and attitude; thus offering a comprehensive and fascinating biography of the ideas which enabled the developments in technology, science, capitalism, and democracy that have formed the foundation of modern society. Bernstein’s premise is that modern man’s mastery of Risk is what distinguishes today’s society from every other age. The realisation that man is not helpless before the gods and nature, and that past experiences could be employed to assess tomorrow, were the revelations that unlocked the door to enabling man to make informed decisions about the future. Bernstein’s analysis extends back some 800 years to when these ideas were first formed, and he follows their development across various countries and cultures. While the topic of Risk is complex and obscure, Bernstein’s historic account is remarkably readable. He chronicles the personal lives and ideas of the various thinkers who contributed to the development of Risk. Through divulging intimate details of the lives and personalities of these fascinating characters, Bernstein brings Risk’s story to life and keeps the reader interested and entertained as he navigates this complex topic. Their discoveries about Risk define the science of decision-making that we use both consciously and unconsciously every minute of our lives, by providing a framework for assessing the likelihood of future outcomes, and enabling us to choose from alternatives. Bernstein examines every step in Risk’s evolutionary chain: from the development of the Hindu-Arabic numbering system that enabled Renaissance men to study Risk, and gamblers who developed probability theory; through to the development of quantitative techniques of Risk management during England’s Enlightenment and the extremely intricate theories and practices that have spawned today’s investment markets. The way Risk was conceptualised changed with each contributor’s attempt to tame it; and its analysis shifted from focusing on Risk’s relationship with the natural world and its governing laws, to man’s relationship with Risk. Here Bernstein’s analysis moves past the abstract, rational limits of Risk to the examination of decision-making and how our emotions and our inability to understand Risk cloud our judgement. It is at this contemporary conundrum that the story of Risk rests, where the complex reality in which we make decisions defies the rational models that the founders of Risk analysis constructed. From Renaissance gamblers through to leading contemporary scholars, Bernstein chronicles how these men transformed the perception and analysis of Risk. Refusing to remain at the mercy of Fate, over the past 800 hundred years we have attempted to tame Risk and bend it to our will, employing ever more sophisticated tools in an effort to forecast the future. Bernstein’s book is a very revealing and entertaining insight into the lesser known history of Risk, and it comes highly recommended. Against the Gods: The Remarkable Story of Risk; published byJohn Wiley and Sons, New York; ISBN 0-471-12104-5. Available in South Africa from www.kalahari.net at R203.36