What is Systemic Risk?
Systemic Risk The risk of collapse or severe dysfunction of an entire financial system or market, as opposed to risk associated with any individual entity; monitored by regulators and central banks.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Systemic Risk” Used in Practice?
Systemic risk is addressed in macroprudential regulation to prevent contagion and cascading failures across interconnected financial institutions.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Systemic Risk?
The risk of collapse or severe dysfunction of an entire financial system or market, as opposed to risk associated with any individual entity; monitored by regulators and central banks.
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