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