systemic risk


Definition of systemic risk

: the risk that the failure of one financial institution (such as a bank) could cause other interconnected institutions to fail and harm the economy as a whole

Examples of systemic risk in a Sentence

Recent Examples on the Web In her view, though the specific risk of Y2K might be over, the broader, systemic risk presented by computer-system interconnection is still very real. Geoff Manaugh, The New Yorker, "When Russia and America Coöperated to Avert a Y2K Apocalypse," 30 Dec. 2019 Just as the threat of bank runs migrated from depositors to money markets, so systemic risk may now be building up in non-bank institutions. The Economist, "Repo-market ructions were a reminder of the financial crisis," 26 Sep. 2019 Regulators and shareholders had valid concerns about the systemic risk of such a combination, though, as well as the difficulty of integrating the businesses. Washington Post, "Deutsche Bank’s Failure Is Another Bank’s Opportunity," 25 Apr. 2019 According to Kaul, overreliance on DTI could even increase systemic risk. David Z. Morris, Fortune, "A Key Change to Mortgage Lending Rules is Coming in 2021. Here’s What That Could Mean," 14 Aug. 2019 Even if there isn’t a sudden drop in price, a risk-free bond bubble may pose more systemic risk to the economy than a standard asset bubble. Allison Schrager, Quartz, "Supposedly “risk free” assets are looking awfully risky," 29 Dec. 2019 China’s central bank’s annual financial-stability report recently mentioned Evergrande, alongside companies that have already fallen from favor like HNA Group, as behaving more like financial holding firms that could pose systemic risks. Jacky Wong, WSJ, "Chinese Property Bonds Are Now a Big Bet on Beijing," 19 Nov. 2018 Since the Great Recession, loans have improved in quality and lending decisions have been based on more and better data, reducing systemic risk, Mayopoulos said. Robert Hackett, Fortune, "Ex-Fannie Mae CEO: Housing Will Be Fine in the Next Recession," 26 Aug. 2019 Only Congress has the power to charter competitors to Fannie and Freddie, a move that would lessen their systemic risk. Los Angeles Times, "Trump’s Fannie-Freddie plan would end a decade of U.S. control of housing finance," 5 Sep. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'systemic risk.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of systemic risk

1977, in the meaning defined above

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Time Traveler for systemic risk

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The first known use of systemic risk was in 1977

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Statistics for systemic risk

Last Updated

26 Feb 2020

Cite this Entry

“Systemic risk.” Dictionary, Merriam-Webster, Accessed 28 Feb. 2020.

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More Definitions for systemic risk

systemic risk

sys·​tem·​ic risk | \ sis-ˈte-mik- How to pronounce systemic risk (audio) \

Legal Definition of systemic risk

: the risk that the failure of one financial institution (as a bank) could cause other interconnected institutions to fail and harm the economy as a whole

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