Risk Factor

How biology can explain what drives banks to the brink of disaster

Marcus Bleasdale / VII

The market's high and lows can trigger a flood of counterproductive hormones.

Every so often we read of a star trader who lost so much money that he gave back all the profits he made over several years and shook his bank to its foundations. How does this happen? Were the bank's risk managers mistaken about this trader's skill?

Maybe. But recent research suggests an alternative explanation--that the winning streak changed the trader. Human biology can help explain what drives traders to acts of folly.

When we take on risk, including financial risk, we don't just think about it; we also prepare for it physically. Body and brain fuse as a single functioning...

Want the full story?

Subscribe Now

Subscribe
Subscribe

Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on TIME.com

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!