Systemic Risk and Network Dynamics
Systemic risk describes the likelihood of cascading failure in networks. Such risks arise in a broad variety of seemingly disparate systems, including interconnected financial markets, food-supply chains, energy grids, and transportation networks.
This project is developing a framework for analyzing systemic risk in complex networks. It will strive to demonstrate this framework’s ability by applying it to a selected set of economic, ecological, and/or social science networks.
The project is beginning with a theoretical exploration of cascading failures using deterministic and probabilistic models of network dynamics. Analysis of changes in a network’s nodes, or connection points, as well as in its structure will be used to assess the risk of collapses and to suggest risk-reduction methods, collapse prognosis, and how best to recover from a collapse.
Case studies analyzing real networks will test the theoretical approaches and help develop network-specific methods. In the project's later stages, computer-based tools for simulating, measuring, and managing systemic risk in network dynamics may be developed.
This work is planned to be pursued jointly by the Evolution and Ecology Program and the Applied Systems Analysis Program. The project may further be linked to work on the management of food-supply networks being conducted as part of the Institute’s Food and Water global problem area.
