5 of the world's most outrageous software glitches

Market-making firm Knight Capital Group – the largest trader in U.S. equities - made headlines last August when its algorithmic trading software malfunctioned, resulting in wild price swings on the New York Stock Exchange.

Knight refused to elaborate beyond the ‘infrastructure problem’ it blamed for the error, but leaked reports suggested that an old software system was inadvertently activated, which multiplied stock trades by one thousand.

The rogue robot cost the company $440 million to ‘trade out’ of its entire erroneous trade position, as it saw its own stocks plummet.

The rumpus re-ignited debate surrounding automated trading: its exponents point to an increase in market liquidity and price discovery, while regular investors claim they can’t compete in a high-frequency environment.

Glitch #2: Risk assessment gone wrong: Software glitch liberates 450 dangerous convicts in California

What would RoboCop say about this cyber catastrophe?

California. A liberal, cultural hot pot, home to sun-kissed beaches, lush forests, Hollywood stars and in 2010, 450 violent, free-roaming prisoners.

Software had been called upon to help roll out a plan to ease overcrowding in Californian jails. The programme, established on the back of a decision to reduce jail numbers by 33,000 over two years, relied on conviction information and inmates’ disciplinary histories to allocate individuals to supervised parole schemes. It used a mathematical algorithm to assign a risk score.

However, in May 2011, a damning report from the prison system’s independent inspector general was released. It emerged that 450 inmates with a propensity for violence were mistakenly placed on ‘non-revocable’ schemes, meaning they didn’t have to report to parole officers, and would only be sent back to prison if they were caught committing a new crime.

The Department of Justice blamed a database error, which failed to identify conviction information for over 8 million arrest records. This left ‘highly dangerous’ individuals – gang members, violent criminals and sex offenders – roaming the streets.

The faulty system ran riot between January and May 2010, with over 2000 offenders escaping proper risk assessment. With convicts presumably walking free, prison authorities have since sought the advice of California State University to rebuild the programme. But calls for former governor of California Arnold Schwarzenegger to reprise a certain film role fell on deaf ears.

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Glitch #3: Britain’sNatWest bank systems go haywire and prevent customers accessing funds

NatWest gets branded "#naffwest"

It’s a hop across the pond for the next software calamity. British banking giant NatWest has been plagued by I.T. problems over the past year. The first episode began in June 2012 and lasted almost a week, resulting in customers being unable to withdraw money, pay for goods and services, or use telephone and internet banking.

The firm offered little explanation for its technical woes, and refused to stump up contingency cash. Some industry experts claim that banks are paying the price for being ‘early adopters’ of I.T. systems whilst technology was still in its infancy, and are now left with a creaking infrastructure.

NatWest’s June 2012 crash saw millions of customers change their accounts to co-ops, building societies and credit unions. The Co-operative bank alone saw applications for its services rise 25% in the immediate fall-out.

The company’s latest financial faux-pas, in March this year, was met by an angry backlash on Twitter, as the term "#naffwest" started trending. It’s worrying times for the Royal Bank of Scotland subsidiary, which is already reeling from the public opprobrium towards Libor fines and bumper bonuses pocketed by senior employees.

Glitch #4:RIM’s Blackberry suffers communications downtime

Blackberry turns sour

Research in Motion’s brainchild the Blackberry, launched in 1999, was the perfect complement for the corporate man. Championed for its communication functionality, US President Barack Obama was clocked as the device’s most famous patron.

2011, however, was a year to forget for Blackberry. With competition from rivals Apple and Android growing, Blackberry committed the cardinal sin of undermining its own USP. An ‘extremely critical’ network failure, which started in the EMEA region before sweeping across the Atlantic and hitting the Americas, prevented users from accessing the internet and text messages for over 3 days. CNN’s Piers Morgan was amongst the disgruntled celebs, tweeting ‘OK, this #Blackberry business is now SERIOUSLY p****** me off!’

A post-mortem by industry pundits attributed some of the blame to RIM’s reliance on cellular networks for email delivery, data provision and browsing capabilities, which creates an unnecessary chain in the link. Others cited the firm’s delay in updating servers to account for the influx of EMEA users.

Research in Motion has since entered the doldrums, suffering a $643 million loss in a single quarter during 2012. It is hoping that the BB10 device, released this January, will help entice users back.

Glitch #5: Volvo embarrassment as crash avoidance technology shuts down

Volvo’s epic fail

This isn’t the most high-profile software error, but it’s certainly one of the most comical.

The automotive industry cast an eager eye over Volvo’s showcasing of its new crash avoidance technology back in 2010.

The Volvo S60, due for release later that year, was released from a testing tunnel at 30mph, before the technology was expected to kick-in and prevent the vehicle from hitting a stationary truck. The test-runs had gone to plan, but the encore for the media failed miserably.

The car’s battery died beforehand, shutting down the crash avoidance technology and sending the car careering into the back of the truck. Engineers behind the S60, which also boasts a pedestrian detection system, were clearly embarrassed, with safety manager Jonas Tisell revealing "that weekend after the test was horrible. We’ve changed the software to be redundant for very short voltage drops."

Taxi for automation, please.

Any more examples of software crashes and I.T. misdemeanours? Please share with the PEX Network!