Risk vs Volatility

I am an avid reader of Howard Marks' memo.  He writes periodically at the Oaktree website.  If you have any interest in reading you can find his site and memo here.  The reason I bring this up is that it is difficult to make the distinction between risk and volatility and it is not always explainable to investors.  Howard Marks always brings it back to basics and never seems to lose site of the fact that you can't predict certain things, especially macro events like recessions or inflation.  Knowing what you don't know sometimes is half the battle and it allows us to focus on what we do know and also be prepared for the worst.  

Which brings me to Peter Bernstein's book "Against The Gods: The Remarkable Story of Risk."  It is a history lesson on where risk analysis has come from and where it is today.  It is also helpful in trying to understand the distinction between risk and volatility which is often times confused and for those that may have an interest in Black-Scholes modeling, it is a guide to where it came from, how it has been used and in some cases how it has been misused.  This book does not get into Monte Carlo simulations -- a better book for that would be Sam Savages "The Flaw of Averages."  

The book is now in the library.  I have found some real nuggets in this book that are worth taking away.  In my world there is a story telling element to help make the complicated more understandable and this book provides a lot of color.  Obviously, not a book for everyone reading this blog, but it is a taste of my world.