Systemic Risk

Overview

The latest financial crisis has painfully revealed the importance of a working financial system for the real economy. Many countries are still slowly recovering from the disruption of financial services, not least due to a lack of understanding what caused the near breakdown of financial institutions and how to best counteract the on-going economic downturn.


While practice and research on economic activity and risk management has focused on individual institutions it is only recently widening its view towards systemic interactions. At this level new mechanisms and feedback, some certainly still waiting to be identified, come into play which can threaten the stability of the financial system as a whole. To tackle this problem, our research takes an interdisciplinary approach drawing on expertise from machine learning, information theory and complex systems.


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