The global financial crisis that occurred in 2008 can be viewed as a systems accident that was fueled, in part, by innovations in the financial sector.
The term “innovation” is often viewed in a positive light. But, in an essay in the new Winter 2009 issue of the MIT Sloan Management Review, Peter Cebon of the Melbourne Business School looks at the financial crisis that occurred in the fall of 2008 as a systems accident –and, specifically, a systems accident that was fueled in part by innovations in the financial sector. Notes Cebon:
While innovation can be extraordinarily valuable, innovations, whether in genetically modified organisms or financial instruments, can contribute to systems accidents. Consequently, an innovation economy needs a strong and intelligent regulatory regime that aggressively manages systemic risks.