Systemic Risk

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Systemic Risk

Risk common to a particular sector or country. Often refers to a risk resulting from a particular "system" that is in place, such as the regulator framework for monitoring of financial_institutions.

Systemic Risk

A risk that is carried by an entire class of assets and/or liabilities. Systemic risk may apply to a certain country or industry, or to the entire global economy. It is impossible to reduce systemic risk for the global economy (complete global shutdown is always theoretically possible), but one may mitigate other forms of systemic risk by buying different kinds of securities and/or by buying in different industries. For example, oil companies have the systemic risk that they will drill up all the oil in the world; an investor may mitigate this risk by investing in both oil companies and companies having nothing to do with oil. Systemic risk is also called systematic risk or undiversifiable risk.
References in periodicals archive ?
The bank risk would be higher if the few sectors which the bank exposes to have higher systematic risks, which can be explained by our regression results when risk-adjusted HHI is used as diversification measure.
Under the premise of preventing systematic risks, allowing some default cases to happen naturally in compliance with market forces will.
We view the introduction of a number of measures in recent months to manage systematic risks in the banking and real estate sector as positive in supporting a sustained recovery," the report said.
Global systematically important banks are global financial institutions playing a critical role in the international financial market, whose material risk exposures or business failure would cause significant impact and even systematic risks to the global economy and financial systems.
Policymakers failed to sufficiently take into account growing macroeconomic imbalances that contributed to the buildup of systematic risks in the financial system and in housing markets.
However, this must be coupled with appropriate regulation to mitigate the systematic risks that caused the enduring economic damage Looking to 2013 and beyond, it is imperative mutuals with the necessary appetite rise to the challenge to capitalise on this current opportunity.
Contextual as well as patient characteristics must be considered when classifying peer groups of general hospitals to enable adjustment for the many systematic risks that are not easily manageable by hospitals themselves (Austin et al.
In recent years, the firm has introduced Structured Active strategies for developed equity markets, commodities, currencies and an absolute return solution that combines several strategies while hedging out systematic risks.
The authority is charged with studying systematic risks and recommending policies to counter them as well as raising awareness on the importance of risk management in any financial institution, he said.
The pricing model in case of segmented markets is constructed in a similar fashion, except that the roles of the local and global systematic risks are reversed.
we find that for some banks the large increases in stock market values prior to the crisis took place on the back of the creation of latent systematic risks whereas for other institutions it reflected relative managerial ability.
pt]) to examine the possibility of shifting systematic risks that is not sensitive to a general increase in total risk.

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