Strategy

A moral hazard is when an..

…actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk.

It’s similar to perverse incentives.

A perverse incentive is an incentive that has an unintended and undesirable result that is contrary to the intentions of its designers.

I have spent the last 6 months working closely with a QA team inside a large financial instutition and have become increasingly skeptical of the value they provide - the development team don’t test as thoroughly as they should because they know that QA are playing backstop.

QA organisations have come a long way in the last decade or two. In the early 2000s, automated unit testing was just gaining popularity and QA was performed manually by armies of testers. The QA process was time-consuming and arduous, and the testing timelines were the first thing to be compressed when development took longer than planned (as it almost always did).

By the 2010s, many applications had moved to a web interface which allowed QA teams to automate some or all of the end-to-end testing using Selenium, or similar. This was a giant leap forward, especially for basic 3-tier apps with a web UI, a “services layer”, and a database. Everything was nicely contained in the one codebase, including the tests. Coupled with Cruise Control Hudson Jenkins, we had a reliable way to delivery quality software quickly.