Against the Gods: The Remarkable Story of Risk

Chapter 19

Awaiting the Wildness

The great statistician Maurice Kendall once wrote, “Humanity did not take control of society out of the realm of Divine Providence . . . to put it at the mercy of the laws of chance.”1 As we look ahead toward the new millennium, what are the prospects that we can finish that job, that we can hope to bring more risks under control and make progress at the same time?

The answer must focus on Leibniz’s admonition of 1703, which is as pertinent today as it was when he sent it off to Jacob Bernoulli: “Nature has established patterns originating in the return of events, but only for the most part.” As I pointed out in the Introduction, that qualification is the key to the whole story. Without it, there would be no risk, for everything would be predictable. Without it, there would be no change, for every event would be identical to a previous event. Without it, life would have no mystery.

The effort to comprehend the meaning of nature’s tendency to repeat itself, but only imperfectly, is what motivated the heroes of this book. But despite the many ingenious tools they created to attack the puzzle, much remains unsolved. Discontinuities, irregularities, and volatilities seem to be proliferating rather than diminishing. In the world of finance, new instruments turn up at a bewildering pace, new markets are growing faster than old markets, and global interdependence makes risk management increasingly complex. Economic insecurity, especially in the job market, ...