Editing Cascading failure (section)

=== Finance ===
{{main|Systemic risk}} {{main|Cascades in financial networks}}
In [[finance]], the risk of cascading failures of financial institutions is referred to as ''[[systemic risk]]:'' the failure of one financial institution may cause other financial institutions (its [[Counterparty|counterparties]]) to fail, cascading throughout the system. Institutions that are believed to pose systemic risk are deemed either "[[too big to fail]]" (TBTF) or "too interconnected to fail" (TICTF), depending on why they appear to pose a threat.

Note however that systemic risk is not due to individual institutions per se, but due to the interconnections. Frameworks to study and predict the effects of cascading failures have been developed in the research literature.<ref name="Acemoglu Ozdaglar Tahbaz-Salehi 2015 pp. 564–608">{{cite journal |last1=Acemoglu |first1=Daron |last2=Ozdaglar |first2=Asuman |last3=Tahbaz-Salehi |first3=Alireza |title=Systemic Risk and Stability in Financial Networks |journal=American Economic Review |date=February 2015 |volume=105 |issue=2 |pages=564–608 |doi=10.1257/aer.20130456 |hdl=1721.1/100979 |hdl-access=free }}</ref><ref>{{cite journal |last1=Gai |first1=Prasanna |last2=Kapadia |first2=Sujit |title=Contagion in financial networks |journal=Proceedings of the Royal Society A: Mathematical, Physical and Engineering Sciences |date=8 August 2010 |volume=466 |issue=2120 |pages=2401–2423 |doi=10.1098/rspa.2009.0410 |bibcode=2010RSPSA.466.2401G }}</ref><ref name="EGJ">{{cite journal |last1=Elliott |first1=Matthew |last2=Golub |first2=Benjamin |last3=Jackson |first3=Matthew O. |title=Financial Networks and Contagion |journal=American Economic Review |date=October 2014 |volume=104 |issue=10 |pages=3115–3153 |doi=10.1257/aer.104.10.3115 |url=https://resolver.caltech.edu/CaltechAUTHORS:20141114-080019333 }}</ref>

A related (though distinct) type of cascading failure in finance occurs in the stock market, exemplified by the [[2010 Flash Crash]].<ref name="EGJ" />