OOPS

In a robot world, Goldman Sachs lists “human error” as new risk factor

Goldman Sachs has a message for investors: As humans, we all make mistakes.

While many daily decisions are made by algorithms, and more trading is increasingly executed by computers, Goldman decided to officially alert investors for the first time to the risk of human error. Take, for instance, the harm those pesky humans can cause by sending emails to the wrong people.

Footnoted spotted the nugget in the bank’s annual 10-k securities filing, in a section about risk factors to the business:

Notwithstanding the proliferation of technology and technology-based risk and control systems, our businesses ultimately rely on human beings as our greatest resource, and from time-to-time, they make mistakes that are not always caught immediately by our technological processes or by our other procedures which are intended to prevent and detect such errors. These can include calculation errors, mistakes in addressing emails, errors in software development or implementation, or simple errors in judgment. We strive to eliminate such human errors through training, supervision, technology and by redundant processes and controls. Human errors, even if promptly discovered and remediated, can result in material losses and liabilities for the firm.

Goldman lumps in the humans along with its operational systems, infrastructure, and other technology components, which it warned can err as business volume, speed, and complexity increase.

The bank’s not the only company to highlight human error in its risk filings. (For example, there’s HSBC, which has had its own share of problems.) But Footnoted wonders whether the added risk factor is a harbinger of bigger problems, or whether “the folks behind Goldman’s 10-K were simply feeling a bit philosophical.”

home our picks popular latest obsessions search