What are examples of systemic risk?

Systemic Risk A risk to an entire system such as a financial system or ecosystem. For example, a change in climate that impacts every ecosystem on the planet or a failure of a financial institution that causes others financial institutions to fail that cause other financial institutions to fail in a downward spiral.

How do you measure systemic risk?

Red or blue means that an indicator passes our statistical test for the respective horizon and country and thus flags systemic risk. Red signifies that a high systemic risk is associated with a high indicator value. Blue means that a high systemic risk is implied by a low indicator value.

What is systemic risk, anyway?

“Systemic risk refers to the risk or probability of breakdowns in an entire system, as opposed to breakdowns in individual parts or components, and is evidenced by comovements (correlation) among most or all the parts.”

Why does systemic risk exist?

Systemic risk refers to the risk of a breakdown of an entire system rather than simply the failure of individual parts. In a financial context, if denotes the risk of a cascading failure in the financial sector, caused by linkages within the financial system, resulting in a severe economic downturn.