What is Systemic Risk?
John Spacey, updated on
Systemic risk is the probability of losses due to collapse of a financial system such as the global economy or the economy of a single nation. There are several major types of systemic risk:
1. PoliticalPolitical risks such as conflict or trade wars between nations.
2. SecuritySecurity incidences such as a cyberwarfare attacks that result in the destruction of financial records. Such an event could lead to collapsing confidence in the financial system.
3. AccountingFinancial fraud or accounting errors that lead to the collapse of major financial institutions possibly triggering a cascading failure of banks.
4. Investment RiskExcessive risk taking by major financial institutions resulting in large losses, bankruptcies and widespread market panic.
5. Economic RiskA major economic down cycle such as a prolonged depression can trigger market turmoil that represents a systemic risk.
RiskThis is the complete list of articles we have written about risk.
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A list of common business risks. The five things that can be done about risk.
A metric for measuring risk management.The potential that you'll achieve too much of a good thing.
Any risk that people have a strong aversion too.The definition of risk taking with examples. A list of risk examples by type. The two main factors in modeling a risk. A definition of calculated risk with an example.
How to calculate relative risk with examples.A list of economic theories that are particularly useful for business.
The tendency for people at high risk to buy insurance.
A list of economic positions or capabilities that allow you to outperform in a particular industry.A definition of knowledge work with examples. A definition of production with examples.
An overview of post-scarcity.The common types of economic infrastructure.
The common types of business competition.The common types of inefficiency.
An overview of supply with common examples.
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