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A number of important responses have been made to address the growth of complication within financial services. An example of a legislative response is the passing of the Sarbanes-Oxley Act in 2002.

In the wake of the Enron and WorldCom scandals, which cost investors billions of dollars and shook shareholder’s confidence in security markets, President Busch enacted the Sarbanes-Oxley Act. This Act essentially held executive officers accountable for their company’s accounting practices and demanded a much deeper level of transparency through financial disclosure. The act created a Public Company Accounting Oversight Board to encourage standard processes for accounting practices and increase the independence of firms that audit public companies.

Although this law only applies to public companies, managers at several private firms have made the decision to practice what is known as open-book management. Open-book management discloses all of the company’s relevant financial information to it employees. This, in theory, gives employees more perspective into the financial workings of the company encouraging better performance.

While these top-down approaches are important improvements, they is more to be down at the point of contact with the now-available information. The cryptic language and sheer size of the disclosed financial documents from many public companies creates its own level of opacity. The more innovative responses come from those actually handling the complexity.

XBRL, or eXtensible Business Reporting Language, is a financial markup language under the XML language family, and is gaining adoption as a standard format in which to produce financial documents. It is basically a set of tags—think blog tags for accounting. XBRL dramatically simplifies the auditing process, giving auditors the ability to “export, manipulate, and mash up financial data.” Initially developed by accountant Charlie Hoffman, XBRL has now grown into an open standard, license-free movement headed by an international non-profit consortium of hundreds of companies.

Hoffman says, “Look how blogs changed news reporting. Anybody is a reporter. With XBRL, anyone can be an analyst.”

Business writer Daniel Roth has a perceptive manifesto advocating for XBRL as part of new, radical transparency.

Of course, designers have been responding to growing complexity as well, especially the field of Information Design.

Information Design »