Financial system loss as an example of high consequence, high frequency events

Conference · Mon Jul 01 04:00:00 EDT 1996

OSTI ID:266632

McGovern, D E

Much work has been devoted to high consequence events with low frequency of occurrence. Characteristic of these events are bridge failure (such as that of the Tacoma Narrows), building failure (such as the collapse of a walkway at a Kansas City hotel), or compromise of a major chemical containment system (such as at Bhopal, India). Such events, although rare, have an extreme personal, societal, and financial impact. An interesting variation is demonstrated by financial losses due to fraud and abuse in the money management system. The impact can be huge, entailing very high aggregate costs, but these are a result of the contribution of many small attacks and not the result of a single (or few) massive events. Public awareness is raised through publicized events such as the junk bond fraud perpetrated by Milikin or gross mismanagement in the failure of the Barings Bank through unsupervised trading activities by Leeson in Singapore. These event,s although seemingly large (financial losses may be on the order of several billion dollars), are but small contributors to the estimated $114 billion loss to all types of financial fraud in 1993. This paper explores the magnitude of financial system losses and identifies new areas for analysis of high consequence events including the potential effect of malevolent intent.

• Research Organization: Sandia National Labs., Albuquerque, NM (United States)
• Sponsoring Organization: USDOE, Washington, DC (United States)
• DOE Contract Number: AC04-94AL85000
• OSTI ID: 266632
• Report Number(s): SAND--96-1581C; CONF-960869--12; ON: DE96012930
• Country of Publication: United States
• Language: English

Related Subjects

99 GENERAL AND MISCELLANEOUS
ACCIDENTS
COMPUTER NETWORKS
ECONOMIC IMPACT
FRAUD
FREQUENCY DEPENDENCE
LENDING INSTITUTIONS
LOSSES
RISK ASSESSMENT
SAFETY ANALYSIS