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20 Jan 2018

"Fat-finger errors" and the Hawaii missile alert debacle

How a "fat-finger error" wreaked havoc on Hawaii

A few days back, residents of Hawaii witnessed 38 minutes of panic after the Hawaii Emergency Management Agency mistakenly issued a ballistic missile warning.

Not long after, a similar incident was reported in Japan where public broadcaster NHK issued warnings of a missile launch from North Korea.

Blunders like these in finance are called "fat-finger errors", and it looks like they're here to stay.

In context

How a "fat-finger error" wreaked havoc on Hawaii

Small mistakes with big consequences

As reported by The Washington Post, the blunder in Hawaii resulted from an employee picking the wrong option from a drop-down menu. The case in Japan was similar too wherein staff "mistakenly" sent out missile alerts.

What are fat-finger errors?

Fat finger errors

What are fat-finger errors?

Financial markets often see blunders arising out of typos or similar small, computer input errors.

Known as "fat-finger errors", these often result in volatility in markets.

Before trading was computerized, such errors were known as "out-trades".

However, with the computerization of trade, fat-finger errors have become increasingly common, and have resulted in quite a few notable blunders.

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The drop-down menu which caused the Hawaii missile alert debacle

Recent blunders

Some recent incidents of fat-finger errors

Recent blunders include a 2014 incident where an anonymous broker on the Japanese stock market mistakenly placed an order worth $617 billion, more than Sweden's GDP.

In 2017, an error by an Amazon employee resulted in losses worth $150 million to thousands of companies.

Another 2017 error also saw Chinese education company K-12 enjoy an unbelievable market valuation of $5 trillion for eight minutes.

Creating interface friction

One possible way to reduce consequential fat-finger errors is to create interface friction between innocuous options and extreme ones (like a missile alert). In simple terms, imagine liking a Facebook post vs deleting your Facebook account - the latter requires far more verifications before execution.

Authorities will need to take steps to avoid Hawaii-like catastrophes


Authorities will need to take steps to avoid Hawaii-like catastrophes

Being an input error, chances of making a "fat-finger error" increases with increasing complexity (or simplicity in Hawaii's case) of computer interfaces.

Owing to this inherent nature of fat-finger errors, increasing computerization and work pressure one is likely to see an increase in such errors.

What remains to be seen, however, is how authorities take steps to prevent catastrophic blunders like Hawaii.

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