The thinking about network maps and traffic data as a management tool is catching on even in finance. They really are one of the few ways to understand complex systems.
This is where Brunnermeier had his insight: What if I knew the relationship between one bank's value-at-risk and the value-at-risk of the entire industry? Then I could see how one institution's problem spills over to other institutions, and I could focus on the institutions that seem to be at the source of these problems. The data, collected not only from banks but also from hedge funds and insurance companies, would have immediate implications for the firms' activities. If the data pointed toward a risk pocket during a crisis, the firms would have to stop taking on new risks and stockpile more cash. If groups of firms started to show similar vulnerabilities, computers and human supervisors would see these patterns, ideally before they got out of hand.
