By understanding the variety and interconnectedness of supply-chain risks, managers can tailor balanced, effective risk-reduction strategies.
When "Black Swan" types of events occur, intra-asset class correlations spike, which illustrates the interconnectedness of securities with similar risk characteristics even if their cash flow sources are strikingly different.
As for the interconnectedness of civilisations east and west, it risks becoming a didactic sledgehammer, "Crossing cultures, crossing time", reeking of 1990s New Labour and the "joined-up" museum.
suggests that a surcharge or levy on large, complex financial institutions, based on their interconnectedness and the degree of risk they pose to the financial system, could help ensure the system's safety.
This is not just risk from the integration of the investment banking and commercial functions, but systemic risk from the interconnectedness of major financial institutions globally, as well as the scope of each individual business.
The hope is that good market intelligence, for example discussions with clued-up investors, can help officials to become more savvy.Yet imagine data nirvana: a colossal, constantly updating spreadsheet of the trading and lending exposures, cross-border activity, interconnectedness and funding risks of all regulated and unregulated institutions.
Therefore, another challenge is to develop effective indicators and to monitor cross sectional risks related to the interconnectedness of the financial system and the real economy.
ESMA should develop distinct clearing thresholds for financial and non-financial counterparties, taking into account the interconnectedness of financial counterparties and their higher systemic risk, said MEPs.
If the hazard arises due to potential deficiencies in the interconnectedness of system components, it may well go undetected by current risk assessment approaches.
Now, the greater risk is understood to be the interconnectedness of each bank to the others.
