Editing Systemic risk (section)

{{Short description|Risk of collapse of an entire financial system or entire market}}
{{Distinguish|systematic risk}}
{{Financial risk types}}
In [[finance]], '''systemic risk''' is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.<ref name="Kaufman">[https://web.archive.org/web/20031006100654/http://www1.worldbank.org/economicpolicy/managing%20volatility/contagion/documents/3qep2.pdf Banking and currency crises and systemic risk], George G. Kaufman (World Bank), [[Internet Archive]]</ref><ref>{{Cite web |url=https://www.atlantafed.org/blogs/macroblog/2009/11/06/what-is-systemic-risk-anyway |title=What is systemic risk, anyway? |date=2009-11-06 |access-date=2024-02-14 |website=atlantafed.org |last=Dwyyer |first=Gerald P.}}</ref><ref name="Ilin" /> It can be defined as "financial ''system'' instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries".<ref>[https://www.newyorkfed.org/registration/research/risk/Daula_slides.ppt Systemic Risk: Relevance, Risk Management Challenges and Open Questions] {{webarchive|url=https://web.archive.org/web/20090305000018/https://www.newyorkfed.org/registration/research/risk/Daula_slides.ppt |date=2009-03-05 }}, Tom Daula</ref> It refers to the risks imposed by ''interlinkages'' and ''interdependencies'' in a system or market, where the failure of a single entity or cluster of entities can cause a [[cascading failure]], which could potentially bankrupt or bring down the entire system or market.<ref>Schwarcz, Steven L. (2008). Systemic Risk. {{ssrn|1008326}}.</ref> It is also sometimes erroneously referred to as "[[systematic risk]]".