The engineer reacts to nature but nature does not generally react to the engineer.
But: The laws of finance react to the financial engineers’ creations, rendering risk calculations invalid.
This is closely related to what George Soros calls ‘the concept of reflexivity’. Loosely speaking, there appears to be a feedback loop (positive or negative) between our actions and the object of our interest that we intend to measure or assess. At best, this renders our assessment inaccurate (probably under so-called ‘normal conditions’) and at worst entirely invalid (most likely under some form of stress or extreme condition).
d.c.k.
