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Innovation in Information Security

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If You Can't Take The Heat, Get Out of The Kitchen

When United Airlines' stock recently tanked on an out of date news report, questions were asked about the appropriateness of relying upon automated news reporting for making critical financial decisions, or really any decision.

Sun Sentinel, and parent The Tribune, might have been quick to blame Google for the incident, but the core problem was that there was no dated byline on the article to provide context for either human readers or Google's automated crawlers. With the only date on the page displaying the article being the current day's date, what conclusions could a reader draw from the article other than the wrong ones? Unless a reader is in the habit of conducting string matches in every article they read against historical news, then they aren't going to pick this up easily. The fact that it doesn't appear as breaking news might provide some context, but where would you assume the error lay if you came across the article without other context?

Google's subsequent actions of highlighting the article in their email alerts relating to United Airlines, and listing it in their Google News archives, merely meant that more people were now aware that the Sun Sentinel was carrying an article on a United Airlines bankruptcy.

It was when humans stepped in and rewrote the article for other news services, particularly those that investors were relying on, that the situation compounded and was the critical error that eventually led to the loss of market value for United Airlines. Without access to other context, there wasn't much else that the readers could have done other than to trust a service that, up to that point, may have been extremely reliable.

Each time the story was picked up and re-reported, from the Sun Sentinel, to Google, to the stock research firm (where the human re-report tied the story to the current date), to Bloomberg, legitimacy was added and this contributed to the final downfall.

With almost daily bailouts and failures in the lending markets could jumpy investors (gamblers?) be blamed for going all in on another bankruptcy report? Yes.

The investors who allowed their decisions to be swayed by an inaccurate report need to shoulder responsibility for their actions, but the stock research firm and Bloomberg need to be asked the hard questions over how they let this happen and why their monitoring systems (if any) didn't flag this as possibly inaccurate. Who knows just how many stop loss orders were activated as a result of the initial slide in price? If all of the sales based on misinformation took place before the stop loss orders kicked in, but resulted in depressing the stock price below this floor, it no longer matters where the information came from, the market was going to be flooded with United Airlines stock that not many people were going to want to hang on to.

If nothing else, this is a classic example of a Swiss Cheese failure (Reason's model). It wasn't a single cause of failure, but a number of procedural and design errors that chained together, with poor or non-existent active and latent defences, to almost wipe United Airlines off the stock market.

When a small (debatable) error on one website can lead to a major company almost being destroyed in a matter of minutes it suggests that something is seriously wrong with how much trust is placed into unverified information and how much value is then applied to that information.

In the rush to be first to the news, you shouldn't leave behind your critical thinking skills. Garbage In will result in Garbage Out, every time.

22 September 2008

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