Normal Accidents: Living with High-Risk Technologies: Difference between revisions

Where you have a complex system, we should ''expect'' accidents — and opportunities, quirks and serendipities, but here we are talking about risk — to arise from unexpected, non-linear interactions. Such accidents, says Perrow, are “normal”, not in the sense of being regular or expected,<ref>In the forty-year operating history of nuclear power stations, there had (at the time of writing!) been ''no'' catastrophic meltdowns, “... but this constitutes only an “industrial infancy” for complicated, poorly understood transformation systems.” Perrow had a chilling prediction: “... the ingredients for such accidents are there, and unless we are very lucky, one or more will appear in the next decade and breach containment.” Ouch.</ref> but in the sense that it is an inherent property of the system to have this kind of accident.

Are financial systems [[complex]]? About as complex as any distributed system known to humankind. Are they tightly coupled? Well, you could ask the principals of [[LTCM]], [[Enron]], Bear Stearns, Amaranth Advisors, [[Lehman]] brothers or Northern Rock, if any of those venerable institutions were still around to tell you about it. But yes. Might mortage securitisations have been on Perrow’s mind?