Systemic Risk

Systemic risk is the risk that a company event could lead to instability significant enough to cause the collapse of an economy or sector within it. Systemic risk was a factor that led to the 2008 financial crisis. There are certain companies that are considered systemic risks, or “too big to fail,” because their failure would harm the economy or their given industry overall. Companies that are also intertwined with others are considered systemic risks.