Risk glossary

 

Systemic risk

The risk that the financial system as a whole may not withstand the effects of a market crisis. In recent years, attention has been focused on emerging derivatives markets, where a handful of players dominate trading. The concern is that the failure of any of these might have serious and widespread consequences for others in the market. The economic crisis and credit market contraction that developed in 2008 raised concerns about financial institution collapses and resulting systemic risk.

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