| Categories of |
| Financial risk |
|---|
 |
| Credit risk |
| Market risk |
| Liquidity risk |
| Investment risk |
| Business risk |
| Profit risk |
| Non-financial risk |
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.[1][2][3] It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries".[4] It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market.[5] It is also sometimes erroneously referred to as "systematic risk".
- ^ Banking and currency crises and systemic risk, George G. Kaufman (World Bank), Internet Archive
- ^ Dwyyer, Gerald P. (2009-11-06). "What is systemic risk, anyway?". atlantafed.org. Retrieved 2024-02-14.
- ^ Cite error: The named reference
Ilinwas invoked but never defined (see the help page). - ^ Systemic Risk: Relevance, Risk Management Challenges and Open Questions Archived 2009-03-05 at the Wayback Machine, Tom Daula
- ^ Schwarcz, Steven L. (2008). Systemic Risk. SSRN 1008326.