Against the gods
With the stock market breaking records almost daily, leaving longtime market analysts shaking their heads and revising their forecasts, a study of the concept of risk seems quite timely. Peter Bernstein has written a comprehensive history of man's efforts to understand risk and probability, beginning with early gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern chaos theory. Along the way he demonstrates that understanding risk underlies everything from game theory to bridge-building to winemaking.
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What Hacker News says
- It's sad that you are being downvoted, for what you say it's pretty correct.
A lot of people don't understand the reason why financial markets were created and why they continue to exist.
There's a really good book called "Against the Gods, the remarkable history of Risk" which gives a good account on an aspect of why financial markets exist.
Basically, parts of society want to advance things (technology, arts, medicine, etc) but that same part doesn't have to carry the risk of doing their project. Financial markets are there to transfer the risk to people willing [able] to take on it.
Credit and Risk are two tools that have influenced the progress of civilization so much, its crazy.
Sure, there are people that abuse financial markets, the same way there are abusive people in Tech, Arts, or any other human endeavor. But that should not disqualify the whole system.
- Against the Gods: The Remarkable Story of Risk by Bernstein is an enjoyable read on this.
- Mastering Bitcoin, The Bitcoin Standard, Broken Money, and finished up a few other books I'd been in the middle of -- Against the Gods being most of interest here, as it was a good history of the discoveries of probability and how we think about risk management.
Also about halfway into Mastering the Lightning Network.
- While Covid 19 was certainly a "Catastrophe", the market for pandemic insurance in 2020 was minuscule and to my knowledge did not cause any insurer solvency issues. There were a few cases of insurers being instructed to pay out significant claims by the courts on Business Interruption losses which the insurers argued were not covered due to existing policy exclusion.
Product development is usually highly specialized as there are a lot of nuances and frictions within the insurance industry that outsiders may not fully understand. It helps also to be in the industry and have the network with insurers, reinsurers, brokers, etc. This is not at all to suggest there isn't room for clever people to bring innovation to the market though!
Book recs are hard to specify for CAT bonds but for insurance in general:
Against the Gods: The Remarkable Story of Risk - Peter L. Bernstein
The Black Swan - Nassim Nicholas Taleb
On the Brink: How a Crisis Transformed Lloyd's of London - Andrew Duguid
The last one is a personal favourite of mine
- not sure it's a story of "people doing hard things" but it may go your way for "mechanics of how things that we take for granted actually got built", the book is "Against the Gods: The Remarkable Story of Risk"
> a comprehensive history of man's efforts to understand risk and probability, from ancient gamblers in Greece to modern chaos theory.
In some parts it's not an easy read, but the underlying stories are very interesting.
- Somewhat related, but very detailed, is the book Against the Gods[0] by Peter Bernstein that documents the historical development of understanding probability and risk. It also discusses what people believed before these concepts were understood.
0 - https://www.amazon.com/Against-Gods-Remarkable-Story-Risk/dp...
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