Risk Propagation

Risk propagation refers to how an issue or problem in one part of a system can spread and impact other areas. For example, if a supplier faces a delay, it can disrupt manufacturing, leading to product shortages and customer dissatisfaction downstream. Similarly, in financial systems, a failure in one bank can affect others through interconnected transactions. Understanding risk propagation helps organizations identify vulnerabilities and implement measures to contain or reduce the spread of risks, ensuring better resilience across interconnected components.