Systemic risk

Systemic risk concerns failures whose effects extend beyond one firm or contract and impair financial stability, credit provision or payment and settlement functions. It may arise from interconnected exposures, common asset holdings, liquidity runs, operational failures or loss of confidence. Swiss regulation addresses it through bank capital and liquidity rules, recovery and resolution planning, oversight of financial market infrastructures and special requirements for systemically important banks. The concept is preventive: it focuses on contagion and critical functions, not merely the size of losses.