Risk management and systemic risk
Risk management and systemic risk brings together the enterprise practice of ISO 31000 and COSO with the newer science of risks that emerge from interactions between systems rather than from any one of them.
- Institution
- The Global Centre for Risk and Innovation (GCRI)
- Service level
- R0: information and enquiries
The short answer.
Risk management and systemic risk as a field covers how organizations and societies identify, assess and treat risk, including risk that arises from the interdependence of systems themselves. In the Nexus Consortium it is studied as science at GCRI by Systemic Risk Management as well as Systems Science and Modelling, governed at GRF by Policy Nexus and Foresight Nexus, and understood financially at GRA by Financial Stability; this gateway links those platforms and the methods they share.
The field, seen three ways.
From the risk register to the risk system.
Enterprise risk management works well for risks an organisation owns and can treat. Systemic risk differs: it emerges from interactions, can be amplified by individually rational behaviour, and is often invisible from inside any one register. The UNDRR Global Assessment Report and the IRGC have both argued for analysis that maps interactions explicitly.
- Risk registers linked across organisations through shared dependencies.
- Interconnection maps, such as those in the World Economic Forum Global Risks Report, read as hypotheses to test, not findings.
- Stress testing of combined scenarios rather than single risks.
Risk management references.
| Framework or body | What it governs or supplies |
|---|---|
| ISO 31000 and IEC 31010 | Principles, framework and process; assessment techniques |
| COSO Enterprise Risk Management | Integration of risk with strategy and performance |
| IRGC framework and OECD critical risks recommendation | Governance of systemic and critical risks |
Every field feeds this one.
Practice sits on Risk Management and coupled models on Systems Modelling; the method pages begin with decision analysis.
The methods behind the field.
- Decision analysis under uncertainty
- Scenario design and stress testing
- Probability and statistics
- Network science and contagion
- Reliability and resilience engineering
- Uncertainty quantification and model validation
- Policy, institutional and decision science
- Game theory and mechanism design
- Causal inference and impact evaluation
- Forecasting and time-series analysis
- Complex systems and agent-based modelling
- Systems engineering
- Financial economics and macro-finance
- Econometrics
- Optimization and operations research
- High-performance, cloud and edge computing
Terms used on this page.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Risk | The effect of uncertainty on objectives, in ISO 31000 usage, often described through events, their consequences and likelihoods. |
| Systemic risk | Risk arising from the interactions and dependencies within and between systems, where a shock can propagate and threaten the functioning of the whole. |
| Cascading risk | Risk that a failure in one system or component triggers failures in others that depend on it. |
| Risk appetite | The amount and type of risk an organization is willing to pursue or retain in pursuit of its objectives. |
Where this page's references lead.
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
Questions and answers.
Why does GCRI host field gateways?
Around GCRI.
Start with an enquiry.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.