Leonard Mlodinow—physicist at Caltech and author of The Drunkard’s Walk, a highly-praised book looking at randomness and our inability to take it into account—has an interview in The New York Times about understanding risk. Some choice quotes:
I find that predicting the course of our lives is like predicting the weather. You might be able to predict your future in the short term, but the longer you look ahead, the less likely you are to be correct.
I don’t think complex situations like [the current financial crisis] can be predicted. There are too many uncontrollable or unmeasurable factors. Afterwards, of course, it will appear that some people had gotten it just right: since there are many people making many predictions, no doubt some of them will get it right, if only by chance. But that doesn’t mean that, if not for some unforeseen random turn, things wouldn’t have gone the other way. […]
In some sense this idea is encapsulated in the cliché that “hindsight is always 20/20,” but people often behave as if the adage weren’t true. In government, for example, a “should-have-known-it” blame game is played after every tragedy.
As someone who has taken risks in life I find it a comfort to know that even a coin weighted toward failure will sometimes land on success. Or, as I.B.M. pioneer Thomas Watson said, “If you want to succeed, double your failure rate.”
I haven’t had a chance to watch it, but in May 2008 Mlodinow spoke for the Authors@Google series.