JPMorgan Chase 'London Whale' risk-model Excel error
JPMorgan Chase's Chief Investment Office lost approximately $6.2 billion on a complex derivatives trading strategy that regulators found had gone undetected for months, partly due to flawed risk modeling.
The damage was public. The root cause was preventable.
JPMorgan Chase's Chief Investment Office lost approximately $6.2 billion on a complex derivatives trading strategy that regulators found had gone undetected for months, partly due to flawed risk modeling.
What the software actually got wrong
A Senate investigation found that the risk model used to monitor the trading positions contained operational errors, including a manual copy-and-paste mistake in the model's Excel spreadsheet that miscalculated the portfolio's volatility, making the growing risk look smaller than it actually was.
A Senate investigation found that the risk model used...
A Senate investigation found that the risk model used to monitor the trading positions contained operational errors, including a manual copy-and-paste mistake in the model's Excel spreadsheet that miscalculated the portfolio's volatility, making the growing risk look smaller than it actually was.
Requs AI Edge Case flags this exact pattern at the requirements and architecture stage — before a single line of code implementing it exists — so the assumption behind it gets challenged while it is still cheap to fix.
Beyond code coverage and "shall" testing
Root causes like this one rarely show up in code coverage or requirements-compliance testing, because nobody wrote a requirement anticipating the specific edge case that broke. Requs AI Edge Case and Requs AI Software FMEA are built to surface exactly this class of overlooked failure mode — before the software is written.
Surfaces this before code exists
Identifies edge cases like this one at requirements and architecture time, using the Common Defect Enumeration to catalog failure patterns seen across hundreds of real-world software failures — including this one.
Connects the failure mode to the hazard
Traces this class of root cause directly to the system-level hazard it can produce, so a defect pattern like this one gets flagged during design review instead of after it ships.
Find the overlooked root causes before they ship.
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