Risk management, which assumes that future risks can be understood, measured
and to some extent predicted, is the focus of this solid, thoroughgoing history.
Probability theory, pioneered by 17th-century French mathematicians Blaise Pascal
and Pierre de Fermat, has made possible the design of great bridges, electric
power utilities and insurance policies. The statistical sampling methods invented
by dour Swiss scientist Jacob Bernoulli undergird diverse activities such as
the testing of new drugs, stock-picking and wine tasting. Bernstein (Capital Ideas)
animates his narrative with a colorful cast of risk-analyzers, including gambling
addict Girolamo Cardano, 16th-century Italian physician to the Pope; and John
Maynard Keynes, whose concerns over economic uncertainty compelled him to recommend
an active, interventionist role for government. Bernstein also traces the development
of business forecasting, game theory, insurance and derivatives, and surveys recent
advances in risk forecasting made possible through chaos theory and by the development
of neural networks.

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