"Against the Gods" by Peter L. Bernstein

Against the Gods: The Remarkable Story of Risk

by Peter L. Bernstein

http://www.amazon.com/Against-Gods-Remarkable-Story-Risk/dp/0471295639/ref=pd_bbs_sr_1/002-2352339-5517608?ie=UTF8&s=books&qid=1181506599&sr=8-1

This book was a bestseller following it’s release in the 90s and one I’ve been meaning to read for sometime. Basically it purports to be a history of the concepts of risk and risk management, veering more and more over the course of the book towards financial risk management (though touching on health and other fields as it goes along). Author Bernstein has received all sorts of critical acclaim and so I came into this with high hopes. But, I have to give the book a mixed review.

Yes, Bernstein is the only one I know to have attempted to tackle this topic and it is a daunting one with its mixture of mathematics, personalities, and history. However, Bernstein is not a historian and it shows. Rather than feeling like a unified work with a solid thesis (theses) and a well-structured narrative, it comes across as a series of almost random anecdotal stories. I didn’t walk away feeling that I had a strong sense of how these concepts had truly evolved from one stage to another to finally bring us to the state of risk management today. Or maybe I should say, I walk away with only vague notions of how that occurred.

The other major criticism is Bernstein’s western-centric approach. He pays brief homage in the beginning to forebears of concepts of risk in other civilizations (Arabs, Indians, Chinese, Greeks, etc.) but ultimately dismisses them and their entire civilizations as having failed to grasp the key concepts. Now, not being a historian of risk, he may well be right, he may well be wrong. But I for one can’t help but think that given the heights other civilizations and their far-flung economies have reached in the past, that they may well have had a far more sophisticated understanding of risk management than Bernstein gives them credit for. I find the hypothesis that they had knowledge which was lost a far more plausible notion than Bernstein’s basic and poorly supported thesis that they simply never figured the basics out. That impression is made all the more powerful by the way Bernstein uses some pretty old-fashioned (and quite frankly erroneous in my view) notions about religious dogma and overwhelming belief in fate in various cultures as the root fault behind other civilizations’ supposed failures to achieve mastery of risk.

Ok, but those faults aside, it is still a book worth reading. If those problems are understood and kept in mind as one reads, the book still remains the only decent attempt I have ever heard of to write a history of how risk management as we know it today developed. I may walk away with mostly just anecdotes from it, but I at least have a whole lot of useful anecdotes I didn’t before!