Goldman Sachs says “People are People”

Buried in the 405-page tome that Goldman Sachs filed at 9:44 pm last Friday — several hours after the SEC closed its electronic window, which means the filing did not become publicly available until Monday morning — was a very interesting (and new) disclosure that provided some insight into the company’s view of the world and should be welcome news to Goldman’s 34,000 employees.

In an age of high frequency trading and big data, the company said that human beings are the company’s greatest resource.

This disclosure came buried at the bottom of a 1,500 word risk factor on cyber-security attacks — a risk factor that has grown significantly at many companies this 10-K season, mostly because of the growing number of high-profile attacks on companies including Sony, JP Morgan Chase, Home Depot and Target.

While little of Goldman’s risk factor related to cyber attacks was new, the part about humans was. Here’s the new disclosure in its entirety:

Notwithstanding the proliferation of technology and technology-based risk and control systems, our businesses ultimately rely on human beings as our greatest resource, and from time-to-time, they make mistakes that are not always caught immediately by our technological processes or by our other procedures which are intended to prevent and detect such errors. These can include calculation errors, mistakes in addressing emails, errors in software development or implementation, or simple errors in judgment. We strive to eliminate such human errors through training, supervision, technology and by redundant processes and controls. Human errors, even if promptly discovered and remediated, can result in material losses and liabilities for the firm.

When we first read this, we couldn’t help but reminisce about our college days listening to Depeche Mode.

Not only was this the first time that a company like Goldman mentioned its employees like this in one of their filings, it was also the first time the company mentioned the possibility of human error. Several other large financial institutions have mentioned human error in passing, based on our review of the documents.

Given that this was a risk factor, one way to look at this is that there’s some big mistake — due to human error — that has not yet come to light yet. Or, perhaps the folks behind Goldman’s 10-K were simply feeling a bit philosophical.

Only time will tell.

Of course, given our view that there are few accidents in SEC filings, we’re thinking the former is more likely than the latter.