Jay HeiserThe financial sector links otherwise weakly coupled economic sectors, particularly during economic declines. Such links increase economic risk and the extent of cascading failures. Our results suggest that firewalls between financial services for different sectors would reduce systemic risk without hampering economic growth.
From “Networks of Economic Market Interdependence and Systemic Risk”, by Dion Harmon, Blake Stacey, Yavni Bar-Yam, Yaneer Bar-Yam
As a society we have largely ignored the implications of rising complexity because we are adaptive to it. At its core, furthermore, grasping the vast conditional complexities of our dependencies is an intuitive exercise, which strives for a picture of the whole when we can see only the parts. This is an anathema to the analytic culture that prizes computable precision.
From “Trade-Off Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse”. by David Korowicz
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Category: risk management Tags: complexity, risk, systemic risk
