Machining the Financial Risk

Over time, technological innovation occupies more space, and The Wall Street Journal published an article today about how “quants” now occupy Wall Street with growing influence.

As routine tasks are performed in less time, the rate of change can advance exponentially. Risk can suddenly appear, seemingly out of nowhere. What can then be attributed to the risk is a creative narrative.

The narrative tends to align more with limiting the liability, which depends on a causal identity, than the instruments that actually intend to cause it.

Liability is an associative property. It naturally associates with identifying causal attributes that influence the direction (and distribution) of the risk.

Using AI is instrumental in associating the outcome (the risk value) with “unforeseen triggers.” Being unforeseen, of course, suggests there is no intention to to do the harm that “quantifies” (measurably explains, or attributes) the benefit derived. The intended effect is, then, the appearance of a limited liability.

Wall Street uses “quants” to design and implement programs that algorithmically manage the risk. If the risk is machined, who is liable for the reward derived from the losses that quantify the risk?

If the alignment is a zero-sum game, then using the program on a routine basis, knowing what the result will be, naturally aligns with the liability of intending to do the harm that derives the benefit — just like doing it without the quants.

The instruments change, but the “intending” causal identity (the efficiency to which we are all naturally obliged) actually doesn’t.

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About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
This entry was posted in Political-Economy and Philosophy and tagged , , , , , . Bookmark the permalink.

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