New Technology: Changing Business Models and Risk Profiles

Michael Grimwade

“We always overestimate change that will take place in the next 2 years and underestimate the change that will occur in the next 10 years.”

Bill Gates, former CEO of Microsoft

New technology is a double-edged sword. Technology obviously allows greater efficiency and also provides new insights into customers and staff members alike. Increased automation, however, may obviously shift a firm’s operational risk profile from day-to-day manual processing errors to more systematic and potentially catastrophic tail-event risks, while disruptive technologies may also facilitate new market entrants and changes in customer behaviours, with associated downward pressures on margin. Finally cyber-criminals can be very professional and are endlessly innovative.

BENEFITS OF NEW TECHNOLOGY

The death of open outcry

During the author’s working life there has been a migration from open outcry and voice trading to electronic trading. For example, when the London International Financial Futures Exchange (LIFFE) was founded in 1982, its futures contracts were traded in outcry pits, using arcane hand signals, which were recorded by video, in case of dispute. During the mid, to late 1990s

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