These data and risk management problems were well-highlighted in the official report into the failure of Lehman Brothers, a firm whose risk management was felt to be close to the frontier of risk management best practices ahead of the crisis.35 For example, the mistaken exclusion of a significant commercial real estate exposure of $ billion meant there was serious misreporting to the Lehman’s board during the crucial months prior to its failure. Information on a significant exposure was lost in translation. The aggregation of these individual risk exposures across the balance sheet was also seriously defective. From the middle of 2007, individual risk limits at Lehman were breached for the fixed income, real estate and high yield business lines. Yet in the process of aggregating these exposures, something too was lost in translation: firm-wide exposures were within risk limits, despite individual components being in breach. It is clear that these failures in data infrastructure and aggregation were not unique to Lehman. They were endemic across the financial industry. Recent reports suggest progress, but make clear that almost all firms have a distance to travel. Real-time, consolidated data capture is still a distant aspiration. As long as that is the case, real-time consolidated risk management remains a pipe dream. But it is a dream that has hope of becoming reality. Missing inventories and mistaken counterparties could be all but eliminated if financial firms’ information systems spoke in a  33  See, for example, Counterparty Risk Management Policy Group (CRMPG) (2008) and Senior Supervisors Group (2009).

Across firms, it is even less likely that information systems have a common mother tongue. Today, the number of global financial languages very likely exceeds the number of global spoken languages. The economic costs of this linguistic diversity were brutally exposed by the financial crisis. Very few firms, possibly none, had the information systems necessary to aggregate quickly information on exposures and risks.5 This hindered effective consolidated risk management. For some of the world’s biggest banks that proved terminal, as unforeseen risks swamped undermanned risk systems. These problems were even more acute across firms. Many banks lacked adequate information on the risk of their counterparties, much less their counterparties’ counterparties. The whole credit chain was immersed in fog. These information failures contributed importantly to failures in, and seizures of, many of the world’s core financial markets, including the interbank money and securitisation markets. Yet there are grounds for optimism. Spurred by technology, other industries have made enormous strides over recent years towards improving their information systems. Improved visibility of the network chain has transformed their fortunes. It has allowed the management of risks previously unmanageable. And it has allowed the development of business practices and products previously unimaginable. To gauge that, we begin by discussing the progress made by two well-known industrial networks over recent years – product supply chains and the world wide web. For both, a common language was the prime-mover behind a technological transformation. That transformation has delivered huge improvements in system resilience and productivity.