The Global Centre for Risk and Innovation (GCRI)
Systemic risk management is the practice and science of managing risks that arise from, and travel through, connections: between organizations, sectors, infrastructure, markets and ecosystems. It extends classical enterprise and public risk management with network thinking, deep-uncertainty methods and resilience engineering. The field matters because the losses that most damage societies are rarely single events. This page defines the field, what experts study and how it connects to other risks. Systemic Risk Management home links to the topics.
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The Systemic Risk Management field covers risk management that sees interdependence, uncertainty, cascading loss and the human consequences of decisions. Experts in it study questions such as risk governance and appetite and identification and risk taxonomy, with methods such as decision analysis under uncertainty as well as scenario design and stress testing. Its counterparts at GRF and GRA look at the same systems through governance and finance.
Fig.How GCRI, GRF and GRA share one field while the authorities decide. Design, not a record.
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Classical risk management treats risk as the effect of uncertainty on objectives and manages it through identification, analysis, evaluation, treatment and monitoring. Systemic risk management keeps that cycle and adds a question: how does this risk interact with others, and what happens to the whole system when parts fail together?
A systemic risk is one where the failure of a component, or a shock to it, can impair the functioning of a wider system. Its hallmarks are interconnection, non-linearity (small causes with large effects), feedback, and thresholds beyond which a system shifts to a different state. These features defeat methods that score risks independently and add them up.
How losses travel through supply chains, infrastructure, financial links and information networks.
Probability where data supports it, scenarios and structured expert judgement where it does not.
Who decides how much risk to accept, and how those decisions are made accountable.
Each firm can hold the same lean inventory, rely on the same cloud provider and buy from the same specialized supplier, and each choice can be rational. Together they create concentration that no single register shows. Public authorities face the same pattern across infrastructure and services. Systemic risk management makes these hidden concentrations visible so that the people responsible can decide what to do about them.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| 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. |
| Resilience | The ability of a system or community exposed to hazards to resist, absorb, adapt to and recover from their effects in a timely way, in UNDRR usage. |
| 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. |
Within GCRI, the field supplies methods to specialist platforms such as Critical Infrastructure and Climate and Hazards, and works with Systems Science and Modelling, which stewards network science and uncertainty quantification. See the Risk management and systemic risk field gateway and the Methods and modelling field gateway.
The Global Risks Forum (GRF) convenes leaders on foresight through Foresight Nexus. The Global Risks Alliance (GRA) builds shared industry understanding of quantitative risk through Actuarial and Quantitative Risk. Dependencies and consequences sets out the links in detail.
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