by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
How many students of risk study history? In particular how many risk students study the history of risk? How many financial engineering programs have a risk course as a core course or even as an elective?
We all know the well worn saying that “those who ignore history are condemned to repeat it”. Studying history helps us to avoid the mistakes (and also learn from the successes) of the past. Furthermore, studying history humbles us in that the more history we delve into the more we learn that others have struggled with the same issues and worked out solutions very similar to our current ones. A classic example of this is the options research of Louis Bachelier whose work on Brownian motion went relatively unnoticed for several years.
Perhaps instead of concentrating on a new statistics package, the profession of risk might be better off if the occasional history book was cracked. Peter Bernstein’s, “Against the Gods: The Remarkable Story of Risk” http://tinyurl.com/3cfpzar is a decent place to start.
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