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"Normal Accidents" as Described by Richard Bookstaber
Finance & Accounting
Pages 4 (1004 words)
“Normal Accidents” as described by Richard Bookstaber Introduction Financial investments are often done in relation to the prevailing global economic climate. Once there is a stable global economic climate, it can be expected that investors would invest more and the result of this is a booming global economic growth.
This is because wrong investments may lead to regrettable financial moments for the investors. The best that an investor may get out of a bad investment is cost aversion. In the absence of this, the investor may be very certain that he or she would be running at a lost. In some cases, the choice of investment is not necessarily what constitutes a bad investment for an investor. Rather, it is the approach used in investing. So an investor may be selecting the best form of investment but he or she may be approaching the investment wrongly. This is exactly the point outlined by Bookstaber in his book, A Demon of our own. The writer is very concerned about approaches that are taken by investors because in his opinion, a series of tightly coupled processes may only lead to normal accidents, which not as the name suggests, may be very disastrous. Normal Accidents Explained In his writing, Bookstaber describes normal accidents in relation to financial forces. The writer first uses scenarios of other forms of forces to explain his arguments of normal forces. The writer notes that “if you put in an extra warning light or sensor on a nuclear reactor or an airplane, that's one more thing that could fail, causing confusion and a disastrous cascade of cause and effect” (Fitch, 2009). ...
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