System risk management policy in banking

Abstract

The goal of this article is to analyze the concept of system risk. The article reviews many definitions of system risk in various literatures. In addition, the article identifies factors that contribute to raising system risk, spreading infection, and provides a conceptual plan linking these phenomena. System risk can be defined as the risk that shock will result in such a significant materialization (eg macro financial) of imbalances that it expands on a scale that disrupts the functioning of the financial system and to the extent that negatively affects the real economy (eg economic growth). The draft of this plan aims to break down and clearly categorize the processes of accumulation, materialization and spread of system risk. This should facilitate its identification and subsequent mitigation by allocating appropriate preventive macroprudential measures.