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It was Aug. 24, 2005, and New Orleans was still charming. Tropical Depression 12 was spinning from the Bahamas toward Florida, but the chances of an American city's being destroyed by nature were remote, even for one below sea level. An entire industry of weather bookies - scientists who calculate the likelihood of various natural disasters - had in effect set the odds: a storm that destroys billion of insured property should strike the United States only once every 100 years. New Orleanians had made an art form of ignoring threats far more likely than this; indeed, their carelessness was a big reason they were supposedly more charming than other Americans. And it was true: New Orleanians found pleasure even in oblivion. But in their blindness to certain threats, they could not have been more typically American. From Miami to San Francisco, the nation's priciest real estate now faced beaches and straddled fault lines; its most vibrant cities occupied its most hazardous land. If, after World War II, you had set out to redistribute wealth to maximize the sums that might be lost to nature, you couldn't have done much better than Americans had done. And virtually no one - not even the weather bookies - fully understood the true odds.

Skip to next paragraph Sasha Bezzubov for The New York Times

Courting destruction in Palm Beach, Fla.

But there was an exception: an American so improbably prepared for the havoc Tropical Depression 12 was about to wreak that he might as well have planned it. His name was John Seo, he was 39 years old and he ran a hedge fund in Westport, Conn., whose chief purpose was to persuade investors to think about catastrophe in the same peculiar way that he did. He had invested nearly a billion dollars of other people's money in buying what are known as "cat bonds." The buyer of a catastrophe bond is effectively selling catastrophe insurance. He puts down his money and will lose it all if some specified bad thing happens within a predetermined number of years: a big hurricane hitting Miami, say, or some insurance company losing more than billion on any single natural disaster. In exchange, the cat-bond seller - an insurance company looking to insure itself against extreme losses - pays the buyer a high rate of interest.

Whatever image pops to mind when you hear the phrase "hedge fund manager," Seo (pronounced so) undermines it. On one hand, he's the embodiment of what Wall Street has become: quantitative. But he's quirky. Less interested in money and more interested in ideas than a Wall Street person is meant to be. He inherited not money but math. At the age of 14, in 1950, his mother fled North Korea on foot, walked through live combat, reached the United States and proceeded to become, reportedly, the first Korean woman ever to earn a Ph.D. in mathematics. His father, a South Korean, also came to the United States for his Ph.D. in math and became a professor of economic theory. Two of his three brothers received Ph.D.'s - one in biology, the other in electrical engineering. John took a physics degree from M.I.T. and applied to Harvard to study for his Ph.D. As a boy, he says, he conceived the idea that he would be a biophysicist, even though he didn't really know what that meant, because, as he puts it, "I wanted to solve a big problem about life." He earned his doctorate in biophysics from Harvard in three years, a department record.

His parents had raised him to think, but his thoughts were interrupted once he left Harvard. His wife was pregnant with their second child, and the health plan at Brandeis University, where he had accepted a job, declared her pregnancy a pre-existing condition. He had no money, his parents had no money, and so to cover the costs of childbirth, he accepted a temp job with a Chicago trading firm called O'Connor and Associates. O'Connor had turned a small army of M.I.T. scientists into options traders and made them rich. Seo didn't want to be rich; he just wanted health insurance. To get it, he agreed to spend eight weeks helping O'Connor price esoteric financial options. When he was done, O'Connor offered him 40 grand and asked him to stay, at a starting salary of 0,000, 27 times his post-doc teaching salary. "Biophysics was starved for resources," Seo says. "Finance was hurling resources at problems. It was almost as if I was taking it as a price signal. It was society's way of saying, Please, will you start solving problems over here?"

His parents, he suspected, would be appalled. They had sacrificed a lot for his academic career. In the late 1980s, if you walked into the Daylight Donuts shop in Dallas, you would have found a sweet-natured Korean woman in her early 50s cheerfully serving up honey-glazed crullers: John's mom. She had abandoned math for motherhood, and then motherhood for doughnuts, after her most promising son insisted on attending M.I.T. instead of S.M.U., where his tuition would have been free. She needed money, and she got it by buying this doughnut shop and changing the recipe so the glaze didn't turn soggy. (Revenues tripled.) Whatever frustration she may have felt, she hid, as she did most of her emotions. But when John told her that he was leaving the university for Wall Street, she wept. His father, a hard man to annoy, said, "The devil has come to you as a prostitute and has asked you to lie down with her."

A willingness to upset one's mother is usually a promising first step to a conventional Wall Street career. But Seo soon turned Wall Street into his own private science lab, and his continued interest in deep questions mollified even his father. "Before he got into it, I strongly objected," Tae Kun Seo says. "But now I think he's not just grabbing money." He has watched his son quit one firm to go to work for another, but never for a simple promotion; instead, John has moved to learn something new. Still, everywhere he goes, he has been drawn to a similar thorny problem: the right price to charge to insure against potential losses from extremely unlikely financial events. "Tail risk," as it is known to quantitative traders, for where it falls in a bell-shaped probability curve. Tail risk, broadly speaking, is whatever financial cataclysm is believed by markets to have a 1 percent chance or less of happening. In the foreign-exchange market, the tail event might be the dollar falling by one-third in a year; in the bond market, it might be interest rates moving 3 percent in six months; in the stock market, it might be a 30 percent crash. "If there's been a theme to John's life," says his brother Nelson, "it's pricing tail."

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Michael Lewis is a contributing writer. The paperback edition of his book "The Blind Side: Evolution of a Game" will be published next month.

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