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 ?
In pursuance of SBP Vision 2020, it has committed to strengthen its financial stability regime to identify and manage systemic risks arising from within and outside the country's financial system, said the Bank.
The regulator said that even though systemic risks in the Austrian financial sector related to the property market remain low, supervisors must monitor the situation closely as mortgage lending is becoming riskier.
The IMF calls for a multi-sectoral approach to addressing emerging systemic risks with broad participation and the necessary powers to establish a fulsome view of systemic risk.
Since the low level of the cyclical systemic risks does not warrant the raising of the countercyclical capital buffer rate, the Financial Stability Board has decided to maintain the current level of 0 per cent with a view to supporting lending.
The respondents were asked to pick up to five elements that posed systemic risks for South Korea's financial market.
The Butterfly Defect: How Globalization Creates Systemic Risks, and What To Do About It, by Ian Goldin and Mike Mariathasian, Princeton, NJ: Princeton University Press, 2014.
Specifically, the authors seek to determine whether insurers (banks) pose a statistically or economically significant source of systemic risks to banks (insurers).
Ian Goldin, Director of the Oxford Martin School, Professor of Globalization and Development at the University of Oxford, and Vice-Chair of the Oxford Martin Commission for Future Generations, is the co-author of The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It.
Technical matter The systemic risks in this case do not necessarily lie with an individual firm; rather, the issue is the way in which a particular market has come to operate.
It is important to note that the pre and post financial crisis systemic risks are not entirely dissimilar, and the threat of a bank run still exists today.
economy, anticipation that the Fed will wind down its bond purchasing program, plus fewer systemic risks in the euro zone.
With this theme in view the objective of this note is to highlight the importance of identifying and building an infrastructure (technology, human resources, and legal framework) which is capable of measuring systemic risks as posed to the banking system in particular and to the overall financial system in general.