Hora’s business thrives, Tempus’s dies. In other networks, hierarchy is the result not of natural evolution but human intervention. For example, the optimal distribution of trees has been shown to comprise contiguous patches separated by firebreaks. 36 The firebreaks created by man generate hierarchy in this system. The same man-made firebreaks are present in epidemiological networks, such as the imposition of travel bans following the SARS outbreak in Asia or the prohibition of animal movement during the foot and mouth epidemic in the UK. 37 All of this has relevance to the future structure and design of the financial network. What is second nature to the watch-maker needs to become second nature to the watchdog. Four topical examples can be used to illustrate the importance of these structural issues for financial network design. First, the past decade has seen an explosion in the dimensionality, and thus complexity, of the financial web. Among others things, that has exacerbated the system’s robust-yet-fragile characteristics and uncertainty about counterparty pricing within the network. Both have been much in evidence recently. Yet there are structural means of addressing these combined problems at a stroke. The stroke is infrastructure. Central counterparties (CCPs) are intended to deal with precisely these problems. They interpose themselves between every trade. In this way, a highdimension web is instantly compressed to a sequence of bilateral relationships with the central counterparty – a simple hub-and-spokes. The lengthy network chain is condensed to a single link.
The oceans provide a rich and lengthy test-bed of the links between diversity and robustness. Over the past millennium, studies of coastal eco-systems reveal some dramatic patterns. 18 For around 800 years, between the years 1000-1800AD, fish stocks and species numbers were seemingly stable and robust. Since then, almost 40% of fish species across the world’s major  18  The results here are based on Worm et al (2006). BIS Review 53/2009  9  coastal eco-systems have “collapsed”, defined here as a fall in population of greater than 90%. That is systemic by any metric. There appear to be many environmental reasons for this collapse, some natural, others manmade. But the distribution of this collapse across eco-systems is revealing. For species-rich – that is, diverse – eco-systems the rate of collapse has been as low as 10%; for species-poor eco-systems, as high as 60%. Diverse coastal eco-systems have proved to be markedly more robust, measured over century spans. Results for large marine eco-systems suggest a similar picture. Over the period 1950-2003, the incidence of collapsed fisheries declines exponentially with species-diversity. 19 Diversity also appears to increase the resilience of fisheries – that is, their capacity to recover – in the event of collapse. These results reappear throughout marine eco-systems, “in coral reefs in Jamaica and on rocky shores in Panama”. 20 And they do not appear to be unique to marine eco-systems.