Understanding safe performance in rapidly evolving systems: a risk management analysis of the 2010 US financial market Flash Crash with Rasmussen's risk management framework

Framing Human-Automation Regulation: A New Modus Operandi from Cognitive Engineering

“…In cognitive engineering and safety science, Rasmussen's (1997) risk management framework has been applied in several in-depth analyses of large-scale accidents. They include such diverse events as the Walkerton E. Coli outbreak in Canada (Vicente & Christoffersen, 2006), the Flash Crash of May 6 2010 in US financial markets (Minotra & Burns, 2016), the alarming rate of mishaps in road freight transportation in the US (Newnam & Goode, 2015), the spread of beef contamination in the UK (Cassano-Piche, Vicente, & Jamieson, 2009), the Sewol ferry accident in South Korea (Kee, Jun, Waterson, & Haslam, 2017), and the police shooting of an innocent man in South London (Jenkins, Salmon, Stanton, & Walker, 2010).…”

“…As the risk management framework is mainly motivated by the fast pace of technological adaptation in today's organizations, the analysis of the Flash Crash in US financial markets with the framework (Minotra & Burns, 2016) arguably offers a unique example of the framework's ability to explain accidents involving systems consisting of humans and automation.…”

“…Rasmussen's framework helps tie together multiple sources of evidence pertaining to the factors involved in a given adverse event, the lack of vertical integration in the sociotechnical system, and the change in behavior or work practices over time. In the Flash Crash, the multiple factors involved were, high market volatility, unusually high selling pressure from Waddell & Reed, the activity of high-frequency traders, stub-quote usage, inadequate transparency on regulatory criteria for breaking trades, cross-market arbitrage, the widespread use of algorithmic trading, Navinder Sarao's manipulative algorithm, and the potentially inadequate market surveillance (Minotra & Burns, 2016). The multiple factors are associated with different actors and some of these factors are intermittent while other factors pertain to inadequate vertical integration coupled with migrations in work practices over time.…”

Modeling Automation With Cognitive Work Analysis to Support Human-Automation Coordination

“…The lack of liquidity causes a slippage, a difference between “the intended price of a trade and the price at which the trade is really executed” ( Investopedia, n.d .). A tremendous loss of liquidity of many financial products, or systemic illiquidity, disturbs the entire market and fails most trading systems in it (e.g., the May 6, 2010, “Flash Crash,” Minotra & Burns, 2016 ; U.S. Commodity Futures Trading Commission & U.S. Securities & Exchange Commission, 2010 ). The scalping algorithm used in the “trend following trading” system being discussed requires a highly volatile market to enter and exit a trade at will to get a good price for the order fill.…”

“…Decision ladder of trend following trading (high degree of automation, unanticipated situation).the May 6, 2010, "Flash Crash," Minotra & Burns, 2016; U.S. Commodity Futures Trading Commission & U.S. Securities & Exchange Commission, 2010)…”