In the digital age, even a small IT error can cost you a lot. Norway’s sovereign wealth fund knows something about this and suddenly saw 980 million kroner (about 86 million euros) burned due to an inconsistency in the indicator calculation.
According to the British newspaper Finance TimesNorges Bank investment management (Nbim), which manages the fund, which is the world’s “richest” fund with assets of approximately 1,400 billion euros, noticed the error in the composition of the reference index a year ago in February. 2023.
This was certainly not the first time capital was “accidentally” lost, but it was undoubtedly the worst accidental operational loss (that’s what mistakes that lead to a nominal reduction in capital are called in technical jargon): decade 2010-2020.
According to the FT’s reconstruction, which conducted Nbim’s internal investigation, the error in question may have been fairly minor in itself but had consequences that the author himself could describe as “inexcusable”.
In fact, the wrong date was entered in the manually updated reference calculation in the Ministry of Finance’s Excel sheet: 1 December instead of 1 November. However, no further details were given about how such oversight might compromise such reporting.
Months later, following the report directly from the Oslo ministry, the mistake was made known to Nbim’s higher-ups, apparently leaving Patrick du Plessis, the company’s risk monitoring manager, feeling “physically ill”.
During a conference last January, the fund’s CEO, Nicolai Tangen, tried to downplay the incident. Of course there was damage, and it wasn’t even negligible.
But Tangen wanted to highlight “these are the things” in managing the complex operations that Nbim faced, as he also did in private correspondence with company members directly involved in the crime at the time. And it was an honor for such an event to happen for the first time. “Don’t let this ruin your weekend,” he wrote in an email to colleagues at the time.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
