Jaron CollisCore ConceptRisk was not quantifiable, attributed to mystical forces Forces for change: arabic numbers and scholars, impetus of new tradeAncient WorldEnlightenmentAdvancesAncient WorldNo measure of risk, chance was attributed to the Gods.Enlightenment1494: Paccioli Puzzle - how to quantify risk? Solved by Pascal and Fermat in 1654, laid groundwork for forecasting. AdvancesThe key events in quantitative risk analysisLaw of Large NumbersNormal DistributionDecision TheoryBayes TheoremDeviation from MeanLaw of Large NumbersFormulated by Jacob Bernoulli 1703, enables probabilities to be calculated after the fact. The first attempt to measure uncertainty (jar of pebbles example). Formed the basis of the insurance industry.Normal DistributionAlso known as Law of Averages, formulated by Abraham De Moivre 1730. Data depicted in a bell-curve. Enabled 'moral certainty' to be determined with fewer samples.Decision TheoryFormulated by Daniel Bernoulli 1738. First mathematically expressed utility theory (likelihood * consequences) Also deals with motivation and future valuation (the Petersburg Paradox) Basis for theory of supply and demandBayes TheoremFormulated by Thomas Bayes, 1750. Concerns inverse probability, how new information is used to revise existing probabilities. A important tool for measuring uncertainty.Deviation from MeanFormulated by C.F Gauss 1865 Concerns identification of normal data from abnormal data.falsescience12002-06-17T22:23:52.007+01:002002-08-27T00:07:07.980+01:00regressionrisk