In recent years, Goldman Sachs has become renowned as one of the savviest players on Wall Street. This week, however, the mighty US bank was forced into an embarrassing admission. In a rare unplanned investor call, the bank revealed that a flagship global equity fund had lost over 30 per cent of its value in a week because of problems with its trading strategies created by computer models. In particular, the computers had failed to foresee recent market movements to such a degree that they labelled them a “25-standard deviation event” – something that only happens once every 100,000 years...