when algorithms are our co-pilots

#SIRACon14

When Algorithms Are Our Co-Pilots

Allison MillerPresident, SIRA

#SIRACon14 @selenakyle

Outline

❖ What are algorithms?

❖ OMG, I LOVE Algorithms!

❖ Algorithms as the foundation of information risk control systems

❖ Algorithms VS (Adversity + Adversaries)

❖ Control vs Complexity

#SIRACon14 @selenakyle

#TBT

#SIRACon14 @selenakyle

Namshub

❖Tie Your Shoes

❖Common core

❖$15.51

1,000,000,000,000

-1

Are you a good algorithm or a bad algorithm?

#SIRACon14 @selenakyle

ed

#SIRACon14 @selenakyle

Namshub

❖Tie Your Shoes

❖Common core❖$15.51

#SIRACon14 @selenakyle

#InQuantsWeTrust

#SIRACon14 @selenakyle

w(e) <3 Math❖ Gauss: What’s Normal Anyway

❖ Bernoulli: Making Heads or Tails of things

❖ Plenty of Poisson in the Sea

❖ Euler: Graph theory, topology

❖ All about that Bayes

❖ Groves of Decision Trees, Nets of Neurons, Totally Random Forests

#SIRACon14 @selenakyle

#WWAD?

#SIRACon14 @selenakyle

What Algorithms Do

❖Simplify❖Match❖Price❖Automate❖Predict❖Compete

#SIRACon14 @selenakyle

#FTW

#SIRACon14 @selenakyle

The Player is the Game

❖ Tic Tac Toe❖ Chess❖ Trivia❖ Poker❖ Tit for Tat

Kasparov vs X3D Fritz

#SIRACon14 @selenakyle

Discussing Games

Mechanics of decision trees

UP

DOWN

CIRCLE

RED

BLUE

MARIO

LUIGI

KIRBY

GIZMO

10, 3

2, 10

10

2, 5

-3, 3A

B

B

A

A

A

#SIRACon14 @selenakyle

#WTF(What, Thou Failest?)

* Es tu, Bot — eh?

#SIRACon14 @selenakyle

Algorithms Gone Wild

❖Bidding/auctions❖Targeting❖Too Many Likes

Why?

#SIRACon14 @selenakyle

Speaking of $$$

❖Black Scholes❖Automation of trading

❖HFT: Faster than the speed of light

#SIRACon14 @selenakyle

#YMMV

#SIRACon14 @selenakyle

Managing DecisionsRisk Management = Decision Management Algorithms are useful for “outsourcing” decisions to our

systems

Systems enforce risk strategies

Defenders and operators design control systems that make decisions Where risks/issues manifest in observable behavior

They can make moves/counter-moves depending on the context and understanding of an actor’s identity or intent

Where system or individual costs/payoffs depend on the outcome of an actor’s actions

Decision strategies can be optimized



UP

DOWN

CIRCLE

RED

BLUE

MARIO

LUIGI

KIRBY

GIZMO

10, 3

2, 10

2, 5

-3, 3A

B

B

A

A

A

Payoffs!

Optimization!

% of populationC

ost

Number of Defects Produced

Cost of Control

Cost of Defects

CV

Total CostCV

Operations

Risk/Loss

#SIRACon14 @selenakyle

Algorithms Rule

❖Defenses❖DevOps❖Devices

#SIRACon14 @selenakyle

Operating a Learning System

Disposition&

Time

EmailCC#ItemsTotal

Submit

Maybe

No!

Yes!! SuOutcomeSuAttempt

Black & Whitelists

Machine Learning

Velocity & Spend caps

Geo & IP Logic

Linking

Data

• Reporting• Metrics• Analysis• Modeling

GoodBadIndeterminate

#SIRACon14 @selenakyle

The Better Mousetrap

Automates defensive action x-platform

- Fast

- Accurate

- Cheap

In Real TimeIn Time to Minimize

LossReasonable False PositivesAs good as a human specialist

Reduces Reduction > Cost CreatedCheaper than Manual

intervention

#SIRACon14 @selenakyle

TheJoyof… #If/Then

#SIRACon14 @selenakyle

The first rule of any technology

used in a business is that automation

applied to an efficient operation

will magnify the efficiency.

The second is that automation

applied to an inefficient

operation will magnify the inefficiency.–Bill Gates

#SIRACon14 @selenakyle

Managing Social Systems

“…all policy systems…pose incentives that are reacted to by groups of agents acting in their own interest, and often those reactions are unexpected

and act counter to the policy’s intentions…”

— Brian Arthur, All Systems will be Gamed: Exploitive Behavior in Economic and Social Systems

#SIRACon14 @selenakyle

Send in the Bots

❖ Convenience vs dependence

❖ Transparency vs obfuscation

❖ Simplicity vs complexity

#SIRACon14 @selenakyle

#TheInterdependenceOf(AllThe)Things

#SIRACon14 @selenakyleAsimov’s 3 Laws of Robotics

1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.

2. A robot must obey the orders given to it by human beings, except where such orders would conflict with the First Law.

3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

#SIRACon14 @selenakyle

SIRAtonin 3 Bot Guidelines

1.Bots are thoughtless but purposeful

2.Bots compete but will also collude

3.The behavior of a network of bots is more complex than the behavior of a single bot

#SIRACon14 @selenakyle

The Complexity Dimension

Embedded system controls are part of the system

Instrument your instrumentation

Learning systems are hungry

Intelligent agents are dumb

Fatal feedback is fatal

Risk hides in complexity

https://www.youtube.com/watch?v=G1t4M2XnIhI#action=share

Photo: Michael Rubenstein/Harvard University

Allison Miller

@selenakyle