Banks are sometimes criticized for operating like casinos. If only that were true! As Mervyn King, the former governor of the Bank of England, noted, if they did, it would at least be possible to calculate the risk. But investment banks play in the real, ever-changing, and uncertain world. Here, not everyone can be trusted, surprises happen, and trying to calculate precise risks can lead to disaster. In fact, the use of theories of finance designed for a world of known risks is suspected to be one of the causes of financial crises.
