systemic risk frameworks

Systemic risk frameworks are structured methods used to identify, assess, and manage risks that could cause widespread disruptions in the financial system or economy. They focus on understanding how individual institutions and markets are interconnected, so that a failure in one part doesn’t trigger a chain reaction affecting the entire system. These frameworks help regulators and policymakers monitor potential vulnerabilities, develop contingency plans, and strengthen resilience to prevent or mitigate large-scale economic crises. Essentially, they act as a strategic blueprint to maintain financial stability by anticipating and responding to risks that could impact many interconnected entities simultaneously.