Providing Integrity for Satellite Navigation: Lessons Learned (Thus Far) from the Financial Collapse of 2008 - 2009

S. Pullen

Abstract:	This paper examines the failures in risk assessment and risk management that contributed directly to the worldwide financial crisis of 2008 - 2009 and identifies lessons that are applicable to risk management in general and to satellite navigation integrity verification in particular. The market-distorting events leading up to the financial crisis are reviewed, and the role of flawed riskmanagement concepts is revealed. In particular, overexploitation of the erroneous Efficient Market Hypothesis (EMH) and the unquestioned assumption of Gaussian market state transition probabilities led to the formulation of risk-quantification models upon which the debt market that collapsed in 2008 were based. This paper derives several lessons from the failures that led to the financial collapse, including the preference for probabilistic models in risk assessment and the need to highlight the assumptions behind deterministic models when they are used instead, particularly when one deterministic model is derived from another. These lessons serve as reminders that, despite the high level of conservatism applied to satellite navigation risk modeling; faulty assumptions can create serious problems if careful vigilance regarding the ongoing applicability of these models is not vigorously and continuously maintained.
Published in:	Proceedings of the 22nd International Technical Meeting of the Satellite Division of The Institute of Navigation (ION GNSS 2009) September 22 - 25, 2009 Savannah International Convention Center Savannah, GA
Pages:	1305 - 1316
Cite this article:	Pullen, S., "Providing Integrity for Satellite Navigation: Lessons Learned (Thus Far) from the Financial Collapse of 2008 - 2009," Proceedings of the 22nd International Technical Meeting of the Satellite Division of The Institute of Navigation (ION GNSS 2009), Savannah, GA, September 2009, pp. 1305-1316.
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