Systemic risk describes the likelihood of an entire system breaking down—a situation caused by cascades of failures in the networks that make up the system. Knowledge of such risk can be invaluable. The global economic crisis brought to light the importance of understanding how disturbances spread through financial systems, for example. Epidemics of infectious diseases and the spread of forest fires also illustrate the underlying principals, and importance, of systemic risk.
Crucially, although all systems have unique characteristics, they also share common features. This project will draw together these commonalities to create a general framework for analyzing systemic risk. Once this framework is in place it can be used to assess and reduce risks in a diverse array of applications.
This cross-cutting project aims to develop methods to measure and reduce systemic risk and to provide tools to assess the potential for system collapse, even under uncertainty. This is vital because situations in which specifics about a network’s dynamics are unknown are common in the real world. The researchers will also investigate techniques for guiding the system back to normal after a cascade of failures.
The project will assess risk in ecological systems (under the IIASA Evolution and Ecology program), financial systems (under the Advanced Systems Analysis program), and the global insurance system (under the Risk, Policy and Vulnerability program).
Specifically, three case studies will be examined in depth:
Babak Heydari (Stevens Institute of Technology, Hoboken, USA) visited the Advanced System Analysis program on 17 June, 2016 and gave a talk in the framework of the Systemic Risk and Network Dynamics project on "A structural perspective on governance of complex socio-technical systems". More
Prof. Dr. Stefan Pickl and Dr. Martin Zsifkovits visited the Advanced System Analysis program on 18 January 2016 and gave a talk in the framework of the Systemic Risk and Network Dynamics project on Simulation and Optimization of Critical Infrastructures and PUMA - Public Management Analytics. More
Last edited: 26 July 2016
2014 - 2017
Gephart JA, Rovenskaya E, Dieckmann U, Pace ML, & Brännström Å (2016). Vulnerability to shocks in the global seafood trade network. Environmental Research Letters 11: e035008. DOI:10.1088/1748-9326/11/3/035008.
Poledna S & Thurner S (2016). Elimination of systemic risk in financial networks by means of a systemic risk transaction tax. Quantitative Finance: 1-15. DOI:10.1080/14697688.2016.1156146.
Poledna S, Molina-Borboa JL, Martinez-Jaramillo S, van der Leij M, & Thurner S (2015). The multi-layer network nature of systemic risk and its implications for the costs of financial crises. Journal of Financial Stability 20: 70-81. DOI:10.1016/j.jfs.2015.08.001.
Shanafelt DW, Dieckmann U, Jonas M, Franklin O, Loreau M, & Perrings C (2015). Biodiversity, productivity, and the spatial insurance hypothesis revisited. Journal of Theoretical Biology 380: 426-435. DOI:10.1016/j.jtbi.2015.06.017.
Kovacevic RM & Pflug G (2015). Measuring systemic risk: structural approaches. In: Quantitative Financial Risk Management: Theory and Practice. Eds. Zopounidis, C & (Eds.), G. Galariotis, pp. 1-21 Hoboken, NJ, USA: John Wiley & Sons. ISBN 9781118738184 DOI:10.1002/9781119080305.ch1.
Leduc MV & Momot R (2015). Strategic investment in protection in networked systems. In: Proceedings, "Web and Internet Economics", 11th International Conference, WINE 2015. pp. p. 434 Amsterdam, The Netherlands. ISBN 978-3-662-48994-9
Veshchinskaya V, Brannstrom A, Rovenskaya E, & Dieckmann U (2012). Ecosystem Vulnerability to Species Loss. In: Worlds Within Reach: From Science To Policy - IIASA 40th Anniversary Conference, 24-26 October 2012, Hofburg Congress Center, Vienna and IIASA, Laxenburg, Austria.
23 May 2016
International Institute for Applied Systems Analysis (IIASA)
Schlossplatz 1, A-2361 Laxenburg, Austria
Phone: (+43 2236) 807 0 Fax:(+43 2236) 71 313